The rule change is part of a wider package designed to stop retirement savings being drained by people holding multiple super accounts and multiple life insurance policies. Whilst the changes would deal with waste and the inefficiency of multiple accounts it is critical that you understand the implications on your financial circumstances.
Some examples of people who might be impacted include those on parental leave, extended sick leave, extended holidays overseas or those who are self-employed who may not have made a contribution for the last 16 months.
Superannuation funds have sent out letters to members who will be affected by this change. However there is an expectation that some members will not get the message or understand the consequences of the change to their circumstances and their life insurance will be cancelled.
If you have received a generic looking letter from your superannuation fund in that last few months, please check the content to ensure that you are not inadvertently caught by this change. Especially if it is your only life insurance coverage then you should speak to your superannuation fund or financial advisor about whether you need this insurance cover.
As part of these measures, low balance inactive accounts will also be transferred to the Australian Taxation Office. Also some fees will be capped or banned.
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The content of this newsletter is general in nature. It does not constitute specific advice and readers are encouraged to consult their Ruddicks adviser on any matters of interest. Ruddicks accepts no liability for errors or omissions, or for any loss or damage suffered as a result of any person acting without such advice. This information is current as at 9 July 2019, and was published around that time. Ruddicks particularly accepts no obligation or responsibility for updating this publication for events, including changes to the law, the Australian Taxation Office’s interpretation of the law, or Government announcements arising after that time.
Any advice provided is not ‘financial product advice’ as defined by the Corporations Act. Ruddicks is not licensed to provide financial product advice and taxation is only one of the matters that you need to consider when making a decision on a financial product. You should consider seeking advice from an Australian Financial Services licensee before making any decisions in relation to a financial product. © Ruddicks 2019