1 July 2019 Protecting Your Superannuation Package
In a nutshell, to protect a person’s retirement savings, from 1 July 2019:
Trustees are prevented from charging certain fees and costs exceeding 3% of the balance of a MySuper or
choice product annually, where a member’s account balance is <$6,000. Particularly administration fees, investment fees, and associated
costs – fees incurred by members simply by virtue of holding a product.
If a trustee has charged more than the amount allowed, the excess above the cap must be refunded to a member, generally within 3 months of
the end of the fund’s income year.
Trustees are prevented from charging exit fees (other than a buy-sell
on a superannuation product, where a member disposes of all or part of their interest in a superannuation entity, regardless of a member’s
a switching fee may still be charged where a member
switches all or part of their interest in a superannuation entity from one class of beneficial interest in the entity to another.
Trustees are prevented from providing opt-out insurance (such
as life, total and permanent disability or income
protection insurance) to a member with a MySuper or choice product if their account is inactive (has not received a contribution or
rollover in the previous 16 months), unless a member has directed the trustee to maintain the insurance;
prior to the insurance ceasing, trustees will be required to notify a member where they have been identified as having an inactive account,
and provide them with the opportunity to take steps to maintain their insurance if they desire.
Trustees are required to transfer an inactive low-balance (<$6,000) MySuper or choice account to the Australian Taxation Office (ATO);
trustees are required to identify inactive low-balance accounts on 30 June (statement date, 31 October of the same year) and 31 December
(statement date, 30 April of the following year) each year, and then report and transfer them to the ATO by the statement date;
a member’s inactive low-balance account may still be considered active (and not transferred to the ATO), where the following occurs:
- the member changes their investment options,
- the member makes changes in relation to their insurance coverage,
the member makes or amends a binding beneficiary nomination,
the member, by written notice given to the ATO Commissioner, declares that they weren’t a member of an inactive low-balance account,
- the superannuation provider was owed an amount in respect of the member.
The ATO are required to consolidate amounts that have been paid as unclaimed money into an active superannuation account within 28 days of
When considering the Protecting Your Superannuation Package and protecting a person’s retirement savings, a recent report* by the
Productivity Commission provides some context:
“Excessive and unwarranted fees remain a significant drain on net
High exit fees can create a barrier to member
across both the accumulation and retirement phases.
Not all members get value out of insurance in super. Many see their retirement balances eroded — often by over $50 000 — by duplicate or
A third of accounts (about 10 million) are unintended multiple accounts. These erode members’ balances by $2.6 billion a year in
unnecessary fees and insurance.”
It’s important to note that the majority of stakeholders support the Protecting Your Superannuation Package. However, this has not been
without its concerns^. For example:
“The fee cap may lead to a reallocation of fees and charges to members who have account balances that are greater than $6,000, or
alternatively lead to a reduction in services for those members with lower account balances.
The definition of inactivity may cause detriment to certain groups, including, for example, those taking parental
Although the precise amount is debated, insurance
likely to increase both because the insurance risk pool
will be reduced and
because high-risk members are more likely to opt-in.”
In our article, ‘Multiple super accounts and you’, we
highlight several of the above points; however, we also highlight, for example, in some instances it can make sense to retain multiple
For example, you may be in a position where:
one superannuation account needs to be retained with the minimum account balance required as you have insurance within it that was
established before a medical condition developed, and
another superannuation account is receiving your personal
and employer contributions due
to its more appropriate investment options, features and/or benefits.
In this instance, depending on your personal circumstances, the first superannuation account may be identified as either an inactive or
inactive low-balance account now or into the future.
Consequently, you may need to take steps to ensure that your insurance is maintained – this may also be pertinent if you are taking time out
of work (raising a family or a career break/sabbatical).
If you have any questions regarding this article, please do not hesitate to contact us.
*Australian Government, Productivity Commission. (2018). Superannuation: Assessing Efficiency and Competitiveness.
^Australian Government (2018). Bills Digest no. 32, 2018–19.