In 2019, Australian Government launched Protecting Your Superannuation Package (PYSP). The goal was to shield your balance from being nibbled away by insurance costs.
So what does this mean and what actions can you take?
>> Inactivity Alert
The PYSP prevents insurance cover for inactive super accounts – those that haven’t seen a contribution or rollover in over 16 months.
>> And what is an inactive account?
- No credits in the last 16 months.
- Balance below $6,000.
- No prescribed condition or release met.
- No insurance, no self-managed or small APRA fund holding.
>> What can you check?
- Do you have the right insurance in your super?
- Do you have the right coverage to meet current and future financial needs?
- Are you juggling multiple super accounts and do they impact on your savings?
>> Three simple strategies
- Make contributions or arrange rollovers to activate your dormant account.
- Consolidate multiple super account into one.
- Contact Richard for help – Let’s Chat Protection
Remember there is no need to navigate the above alone! You can consider using ATO online services to consolidate, reach out to your super fund or contact us for a chat.
>> Why should I care and what are the consequences if I do nothing?
A non-active contribution strategy may make your insurance redundant! You know that old saying ‘out of sight and out of mind’ – well that does not apply here!
A common strategy prior to the changes in 2019 was for people to retain insurance cover within an ‘inactive’ super fund, as they may not have wanted to, or have been able to due to health changes, move their cover elsewhere.
A nominal balance would be maintained to provided for the insurance premiums, with occasional contributions to top up the fund to ensure future premiums would be paid for. However, this could have meant a period of more than 16 months between contributions in.
A fund could become inactive and the account closed by transferring to the ATO, which will cancel the insurance cover. Super funds will typically inform clients prior to actions occurring, however, these communications could be missed.
Let’s Chat if you need help on ensuring you have the right insurance, at the right time and when you need it the most.
Let’s chat if you are considering income protection insurance or would like to review your current cover with SBA Insurance Adviser, Richard Jones.
Richard Jones, SBA Insurance, Adviser
Richard assists Collins SBA clients understand and navigate the unexpected and the unplanned. Common triggers for reviewing insurance plans include babies, an increase or decrease in income, or business revenue, purchasing a property or new business, a change in shareholder agreements, and change in your liabilities, marital status or health.
Richard makes the complex easy to understand and is readily available to answer questions. The team at Collins SBA love working with Richard and the opportunity to learn directly from him.
Bachelor of Commerce (B.com.), Accounting and Finance, Advanced Diploma Financial Services.