Home / Life Insurance / Slater and Gordon flags insurance concerns over 'stapling' reform
7 June 2021
Plaintiff law firm Slater and Gordon is the latest to voice concerns over an impending change to the superannuation scheme that will lead to Australians holding just one default account.
Practice Group Leader Sarah Snowden says the planned stapling measure as set out in the draft Treasury Laws Amendment (Your Future, Your Super) Bill 2021will have “unintended consequences”.
The stapling measure is designed to save workers from paying unnecessary multiple account fees and group insurance premiums.
Under the proposed change, employers will be required to make contributions to an existing fund of new employees unless they decide otherwise. And if new employees do not decide on a new fund, employers are no longer allowed to automatically create a new super account in their chosen default fund.
The bill has had a second reading in Parliament and is set to commence on July 1 if it gets passed. Treasury consultation on the draft bill closed last month.
“The speed of the proposed stapling legislation roll-out is concerning and allows little time for people to consider their options,” Ms Snowden said.
“People need to give serious consideration and check that their current super insurance policy is the right one for the type of work they are going to be doing going forward.
“New super accounts will no longer be created every time a worker changes jobs so injured workers won’t have the multiple insurance policies in multiple funds to rely on when making a claim as they have had previously.”
She says some total and permanent disability and life insurance policies are industry or employer specific.
She says a policy may exclude jobs deemed as hazardous based on working conditions or offer benefits only to those employed in a specific industry, meaning a person who moves into a different role could be ineligible to claim against their own policy after paying premiums if they are injured or ill while working in that role.
“People often overlook the fact they have insurance benefits they can access if they become ill or injured and can no longer work, within their super fund,” Ms Snowden said.
“It’s arguably the most cost effective and affordable insurance for people to have and it can be devastating to learn that you are no longer entitled to this insurance.”
Actuaries have also expressed concerns over the potential insurance impact in a submission to Treasury.
The Actuaries Institute says the proposed stapling measure may lead to many members losing valuable group cover benefits.
“This is of particular concern for members entering dangerous occupations,” the institute says in the submission.