Changes to boost sav­ings

NT News - - NEWS - SO­PHIE ELSWORTH

YOUNGER Aus­tralians will have more money in their re­tire­ment kitty af­ter a dras­tic over­haul of the su­per­an­nu­a­tion sys­tem that will see them bet­ter off later in life.

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

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

The In­sur­ance in Su­per­an­nu­a­tion Work­ing Group – backed by both in­dus­try and re­tail funds – has iden­ti­fied bal­ance ero­sion as a key con­cern.

Aus­tralianSu­per’s group ex­ec­u­tive of mem­ber­ship, Rose Ker­lin, said for younger Aus­tralians 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 work­place they re­ally need to start build­ing that base for their re­tire­ment sav­ings and what we were wor­ried about was un­due ac­count ero­sion,’’ she 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 the age of 25 and each year only about 20 claims for to­tal and per­ma­nently dis­abil­ity (TPD) 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.”

Ms Ker­lin said com­pul­sory in­sur­ance which cov­ered death or TPD claims pri­mar­ily ben­e­fited peo­ple who had de­pen­dants or fi­nan­cial com­mit­ments and only 10 per cent of the 20 claims made an­nu­ally was used by part­ners and spouses or chil­dren.

The new changes will be im­ple­mented from Novem­ber 2018.

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