Su­per bonus for young

Mercury (Hobart) - - NEWSFRONT - SO­PHIE ELSWORTH

YOUNGER Aus­tralians will have more money in their re­tire­ment kitty af­ter a dras­tic over­haul of the su­per­an­nu­a­tion sys­tem.

One of the na­tion’s largest funds, Aus­tralianSu­per, has re­vealed it will scrap au­to­matic in­sur­ance for new mem­bers un­der 25, which is tipped to de­liver them an ad­di­tional $9000 come re­tire­ment time.

Un­der the changes new mem­bers will be re­quired to “opt in” to in­sur­ance rather than au­to­mat­i­cally re­ceiv­ing it when they sign up. It will not im­pact ex­ist­ing mem­bers.

The in­sur­ance in su­per­an­nu­a­tion work­ing group — backed by in­dus­try and re­tail funds — has iden­ti­fied bal­ance ero­sion as a key con­cern.

Aus­tralianSu­per’s group ex­ec­u­tive of mem­ber­ship, Rose Ker­lin, said for younger Aus- tralians kick­start­ing their work­ing ca­reers, pay­ing costs in un­nec­es­sary in­sur­ance in their younger years when they were un­likely to make a claim would hin­der their bal­ances come re­tire­ment.

“When peo­ple un­der 25 start out in the work­force they need to start build­ing that base for their re­tire­ment sav­ings and what we are were wor­ried about was un­due ac­count ero­sion,’’ Ms Ker­lin said.

“We looked at all of our claims and we looked at in­sur­ance that could be of lim­ited value.”

The over­all sav­ing for a mem­ber join­ing the fund at age 15 is $637 and this amount will ac­cu­mu­late in com­pound in­ter­est to about $9000 by re­tire­ment at age 65.

Aus­tralianSu­per has 150,000 mem­bers un­der 25 and each year only about 20 claims for to­tal and perma- nently dis­abil­ity are paid out.

The As­so­ci­a­tion of Su­per­an­nu­a­tion Funds of Aus­tralia’s chief pol­icy of­fi­cer, Glen McCrea, said while in­sur­ance through su­per was im­por­tant, “fund mem­bers and funds need to con­sider whether what they are of­fer­ing is suit­able for their par­tic­u­lar mem­ber­ship”.

“We note a va­ri­ety of funds are ad­just­ing in­sur­ance ar­range­ments in or­der to get the right bal­ance for their mem­bers be­tween sav­ing for re­tire­ment and hav­ing in­sur­ance cover dur­ing work­ing years,’’ Mr McCrea said.

Ms Ker­lin said com­pul­sory in­sur­ance that cov­ered death or TPD claims pri­mar­ily ben­e­fited peo­ple with de­pen­dants or fi­nan­cial com­mit­ments.

The fund said it did not make rev­enue from in­sur­ance as its prof­its went to mem­bers.

The changes will start in Novem­ber next year.

Newspapers in English

Newspapers from Australia

© PressReader. All rights reserved.