Home / Life Insurance / Planned insurance review of job exclusions fails to allay protection fears
21 June 2021
Financial Services Minister Jane Hume has announced Treasury will carry out a review of occupational exclusions in default insurance offered by MySuper products.
She made the announcement in a speech last week for the second reading of the Treasury Laws Amendment (Your Future, Your Super) Bill 2021. The Bill was passed last Thursday, with the Government saying the “landmark reforms” will save Australians $17.9 billion over 10 years.
“Default MySuper products are available to any member of the public,” Ms Hume said. “These products are required to provide death and total and permanent disability insurance cover on an opt-out basis.
“Notwithstanding this, the Government understands that a small minority of funds maintain occupational exclusions for MySuper products.”
She says these exclusions may impact the appropriateness of cover that an individual ultimately receives, including as they change occupations over time.
“That's why the government has tasked Treasury with undertaking a review of occupational exclusions in default insurance offered by MySuper products, with a view to determining whether such exclusions remain appropriate,” Ms Hume said.
The planned review has failed to allay concerns that workers, especially those in physically demanding and hazardous occupations, may not be adequately insured because of the super reforms.
One of the key changes under Your Future, Your Super Bill will put an end to workers having multiple superannuation accounts, thereby eliminating the need to pay unnecessary account fees and group insurance premiums.
But critics of the measure say this could put vital insurance protection at risk.
Industry fund Cbus, which has spoke out against the reform, says the proposed Treasury review “offers no security” for the 2.7 million workers who are in physically demanding and highly hazardous jobs.
“A review does not negate the fact that once implemented, the government’s ‘stapling’ legislation will lead to serious consequences for workers moving into hazardous jobs,” Cbus said in a statement.
“Now at risk is access to critical insurance for young workers who move into a hazardous sector at a time of life when they are at higher risk due to inexperience and unengaged with their superannuation and retirement planning.”
Cbus CEO Justin Arber says workers who could be affected by the changes should be made exempt until at least after the exclusions review is complete. The stapling reform is set to commence on November 1.
“A Treasury review of unspecified outcome or timing will do nothing to mitigate the immediate impacts for workers in hazardous sectors,” Mr Arter said.
“Within months workers in hazardous occupations are at risk of being stapled to a fund containing exclusions or unfavourable terms and conditions because their existing insurance cover has not been tailored to their new job.
“Despite paying insurance premiums, stapled members in heavy blue-collar occupations or people working at heights may not be covered.”
The stapling reform has however been welcomed by the Financial Services Council (FSC).
FSC CEO Sally Loane says the peak body’s analysis shows having one sole superannuation account will save workers up to $1.8 billion in fees over the first three years.
“This is an important milestone in our $3 trillion mandatory system, ending the scourge of unintended multiple superannuation accounts which have cost Australians billions of dollars in duplicate fees,” Ms Loane said.