Protecting Your Super Package

Protecting Your Super Package

Published May 28, 2019


Do you (or an immediate family member) have an inactive super fund with a balance less than $6,000?

Are you funding insurance policies from this fund?

If yes, below is an important message to protect your money and your insurance policy. 

Recently the Federal Government introduced new laws, known as Protecting Your Super Package, designed to protect small superannuation balances. Under the new laws the following changes will apply:

  • Insurance will be maintained on an opt-in basis for inactive accounts. (An inactive account has been defined as an account that has not received a contribution in a 16 month period.)
  • Superannuation trustees will be required to transfer all inactive accounts with balances below $6,000 to the ATO, who will then attempt to transfer these balances to the owners active superannuation account. If no other active superannuation account can be identified by the ATO, the balance will be allocated to lost superannuation.

Many Self-Managed Superannuation Fund (SMSF) members, or others with large super balances, maintain smaller, secondary super accounts (usually through an Industry Super Fund) for the sole purpose of accessing cost effective group life insurance. This new legislation may place those life policies at risk unless action is taken to preserve the life cover.

If you have been maintaining a small inactive superannuation fund for insurance purposes, this change in legislation will affect you. If you do nothing, you may have your insurance policy cancelled and/or your balance transferred to the ATO.

Your superannuation fund should contact you to request that you opt in to maintain your insurance cover. Please ensure that they have your correct contact details. If you have not heard from your fund yet, we strongly advise that you contact them directly if your intent is to maintain your insurance cover. The implications of having insurance cover cancelled can be significant.

Superannuation funds can hold Term Life Cover (death cover), Total and Permanent Disablement Cover (TPD) and/or Income Protection Cover on your behalf, often through cost effective premium rates and without having to undergo personal medical underwriting, which may include medical tests.

Should existing insurance cover be cancelled, you may not be able to renew cover on similar terms. You may need to disclose medical conditions that have arisen since the original cover commenced, and have higher premiums, or exclusions as a result, or you may not be eligible for replacement cover at all. This may be of particular concern to older people, those with poor health, or work in a high-risk occupation.

If you have debt(s), financial dependents or rely on your income for your financial security and your insurance is held in a super fund that you do not currently contribute to, you will need to consider whether to make the fund active, or inform the trustee that you want to opt-in.

While each fund will have differing requirements, we have been advised that the following actions may make a superannuation account active:

  • Make a super contribution; and/or
  • Rollover other superannuation funds into the account.

While the above actions may make a superannuation account active, each superannuation fund will have their own specific requirements to make an account active. Please follow the instructions listed in their correspondence to you to ensure your account remains active. If you are unsure whether you should maintain your current insurance cover it may be beneficial for you to opt-in initially, and then consider maintaining cover.

If you would like assistance in completing actions to ensure your account remains active, or have any further questions, please do not hesitate to contact me or our insurance specialist, Lara Gill who can be contacted on 02 6763 0100 or email

This information is of general nature only and is not intended as a personal advice. It does not take in to account your particular investment objectives, financial situation and needs. Any references to past investment performance are not an indication of future investment returns. Before making a financial decision, you should assess whether the advice is appropriate to your individual investment objectives, financial situation and particular needs. We also recommend you consult a financial adviser who will assist you. You should also obtain a copy of and consider the Product Disclosure Statement (PDS) for any financial product mentioned before making any decision to acquire the product. Prepared by Forsyths Financial Services Pty Ltd ABN: 89 103 898 988 AFSL: 259938.