MySuper places insurance at risk
MySuper should be an opt-in proposition for superannuation fund members in circumstances where many are at risk of losing significant insurance benefits, according to the Corporate Super Specialists Alliance (CSSA).
Further, CSSA president, Douglas Latto has cited a case where one person's insurance cover was reduced from $1,673,000 to $60,000, while he said others had had their cover halved as a result of being moved into a MySuper product.
Latto has pointed out that the transfer to MySuper accounts has already begun even though the final date for doing so is 1 July, 2017.
"Those who are pushing for the transfers to occur as soon as possible are viewing the issue too simplistically and are not mindful of members who are at risk," he said.
"Fees are not the only issue to consider when implementing these changes. A lot of people have insurances and we know of a number of providers who are not only going to switch members to MySuper accounts, but who are also going to reduce or cancel their insurance as well."
Latto said some superannuation funds were now offering low-cost ‘vanilla-based' products that prescribed low levels of insurance cover without the option to have higher amounts.
"So those who are being transitioned to these products are the ones who are going to lose out significantly," he said.
Latto suggested that it was in these circumstances the transition to MySuper should be made ‘opt-in', not ‘opt-out' for all members with insurance cover.
"At the moment, it is quite clear that the best interests of many super fund members are not being met and unless we make MySuper ‘opt-in', we will have a serious problem when claims arise."
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