Minister for Revenue and Financial Services Kelly O’Dwyer says there is plenty of confusion among consumers around how insurance provided through superannuation works.
Ms O’Dwyer said that insurance in super is an area in which she receives many letters from her own constituents as well as those of her colleagues in parliament.
“It is fair to say there is a lot of confusion about how this part of the industry works,” Ms O’Dwyer said at the ASFA Conference last week.
“Especially among younger people who find their balance has been eroded by insurance premiums they didn’t realise they were paying.”
Ms O’Dwyer said she understands from APRA that some super funds have been slow to tackle the issue through the implementation of appropriate policies and changes to insurance arrangements.
“Trustees have an obligation to balance the offering of insurance inside superannuation with the potential erosion of member balances,” she said.
“It is critical that this important part of the system is consistent with the overall objective of superannuation and is fit for the future.”
Former ASFA chairman Jim Minto also spoke at the conference, saying it is important industry communicates effectively with members so that they understand the necessary trade-off between affordability and restrictive terms.