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In February 2019, the Federal Government passed legislation to support the Protecting Your Super Package introduced in the 2018/19 Budget.
The Protecting Your Super Package introduced several measures that are designed to ensure that members’ super balances are not eaten into by unnecessary fees and charges.
The new law requires super fund trustees to:
Importantly, the legislation does not take into account whether cancelling insurance and the low balance transfers to the ATO best suit someone’s personal circumstances. So read on to see how the changes might impact you and what you can do about them.
Have you got less than $6,000 in a super account?
Effective 1 July 2019, there is a limit on the amount of administration fees, investment fees and certain costs that can be charged to members with an account balance of below $6,000. The total combined amount of these fees will be capped at equal 3% of that member’s account balance.
If your First Super account falls into this category, you don’t need to do anything to activate the fee cap – we will process that for you automatically.
Also from 1 July 2019, there are no exit fees on any super account, regardless of account balance.
Exit fees are seen as one of the reasons for putting members off consolidating multiple super account balances. Consolidation of accounts, also known as “rolling in”, saves you from paying fees across several accounts and prevents your super savings from being eroded unnecessarily.
To find out more about combining your other super balances to First Super, visit our Combine your super web page.
When you joined First Super, you automatically received a ‘default’ level of cover for Death and Total and Permanent Disablement (TPD). The level of default cover you receive depends on your age and employment type.
If you are not sure what insurance you have or how much cover you have, it’s detailed on your Annual Member Statement. Alternatively, you can check by calling our Member Services Team on 1300 360 988 or logging into your firstonline account.
As of 1 July 2019, First Super is required to switch off a member’s insurance cover when their account has been inactive for 16 months. For the purposes of this law, an account is considered “inactive” when:
You can find more details about these changes on our dedicated Insurance and Inactive Member Accounts web page. Alternatively, for help on this or any other super matter, please contact our Member Services Team on 1300 360 988.
If you haven’t made a contribution to your First Super account for 16 months and have a balance below $6,000, then we may need to transfer it to the ATO. This won’t affect members who have changed their investment option and/or insurance cover (e.g. increase cover amount) and/or made a binding nomination of death benefits.
Under the legislation, super funds were required to identify inactive low-balance accounts as at 30 June 2019, then transfer the unclaimed super money to the ATO by 31 October 2019. The ATO would then try and reunite a member’s account with their active account elsewhere.
After 31 October 2019, these transfers to the ATO will become an ongoing process for any member’s low balance account has been inactive for a period of 16 months running.
Your account may be transferred to the ATO if:
However, an inactive low-balance account is deemed to be active if any of the following have occurred within the past 16 months:
Accounts transferred to the ATO will no longer enjoy the benefits of profit-to-member super funds, which generally provide lower fees and better investment returns for members.
If your inactive First Super balance is transferred, the ATO will keep your money safe and you won’t pay any fees. Within 28 days of receiving your money, the ATO will try to reunite it with your active super fund if you have one, and where the transfer would take your total balance to $6,000 or more. When you claim your lost super, any interest due will be paid to you. Interest is based on the Consumer Price Index (CPI).
If your account is transferred, you will also lose any insurance cover you have. This means First Super will no longer cover you for Death (including terminal illness), Total & Permanent Disablement (TPD) and, if selected, Income Protection.
If you do not want your balance to be transferred to the ATO, the easiest way is to reactivate your First Super account.
If you are unsure about whether or not you should be taking any action on any of the above, we encourage you to seek advice. For help on this or any other super matter, please contact our Member Services Team on 1300 360 988.
Further information is also available on ASIC’s MoneySmart website.
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