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Protecting Your Super: preparing for 1 July changes
Have you received a letter from your Superannuation Fund asking you to opt-in to your existing insurance under the Protecting Your Super legislation? If the answer is “yes” then you are not alone. Below is a bit of information around what it is, the risks you face if you do not act on the correspondence and why the insurance can be so important.
These reforms are designed to ensure that members aren’t paying for insurance cover they don’t know about and that premiums and account fees aren’t inappropriately diminishing their retirement savings.

What are the changes?
The following reforms will be effective from 1 July unless otherwise stated:

A fee cap on low-balance super accounts
For members with a total investment less than $6,000 at the end of the fund’s income year (30 June), administration and investment fees, including indirect costs, will be capped from 1 July. As at 30 June in a given income year, if the fee cap applies to an investment any fees charged for that year that exceed 3% of that investment, will be refunded to the account by 30 September.

Ban on exit fees
Regardless of account balance, members will no longer be charged an exit fee when withdrawing all or part of their super from their account. These fees will either be removed or refunded to their account.

Transfer of inactive low-balance accounts to the Australian Tax Office (ATO)
From 30 June, super accounts with a balance less than $6,000 will generally (see exceptions below) be required to transfer all or part of that account to the ATO if there have been no contributions or rollovers for a period of 16 continuous months. 

An account will not be transferred to the ATO in certain circumstances including if:

  • insurance is held through the account
  • the account is a pension account, including a transition to retirement account
  • the member is over 65, or
  • in the last 16 months, the member has given their Super Fund Trustee or the ATO an inactive low-balance account declaration confirming they want their super account to remain with us.

Insurance within inactive super accounts
Insurance benefits will cease to be provided through an inactive super account if no contributions or rollovers have been received for a continuous period of 16 months unless the member has made an election to retain their cover before the account reaches 16 months of inactivity. Inactivity notifications will be sent to Superannuation Members when they reach 9, 12 and 15 months of inactivity (ie no contributions or rollovers received).

What are the impacts on Superannuation members?
If you have received a notification from your Superannuation Fund regarding having an inactive account and you wish to retain your Insurance cover, then you need to ensure you speak with your fund about retaining the cover.

This becomes even more crucial if you have any pre-existing medical conditions that could impact your ability to obtain new cover at all, or on the same terms. We do agree that it is important that you are not paying for insurance you don’t need, however with Australia having an under-insurance problem it is important to make sure you have enough life and disability cover moving forward.

Why is this a good time to review your Insurance needs?
If the cover that you have is potentially changing or reducing then this is an important time to review your insurance needs.

We are always there to help Miners’ Promise members understand the complexities of personal insurance, but as a start you may want to ask yourself:

1. How do I want to leave my family financially in the event of my death?

  • Pay out the mortgage?
  • Provide income so your spouse does not need to work?
  • Provide for Education expenses?

2. Would the cover I currently have provide this?
If the answer to question 2 is “no” then it is certainly time to give us a call to discuss a plan to meet your individual circumstances.

If you would like to discuss your Insurance needs please contact us by email, or phone on 08 6336 0100.

Miners’ Promise Members Receive a 10% Discount off all Gravell & Thomassen Financial Planning services.

HK & MR Financial Services Pty Ltd ABN 87 610 924 831, trading as Gravell & Thomassen Financial Planning, is a Corporate Authorised Representative No.1239727 of Cambridge Securities Pty Ltd AFSL No 364 861

GENERAL ADVICE & DISCLAIMER: Any recommendation or advice contained in this Newsletter is not intended to be financial advice and is for general information only.  Readers should only act on information after having received professional advice appropriate to their personal circumstances.