Media Releases

10 June 2019

Time to check

More than half of Australians in the dark on important changes to superannuation taking effect on July 1

Monday 10 June, 2019 – From July 1st, more than three million Australians may be affected when default insurance is switched off within superannuation accounts that have been inactive for 16 months.

A new study[1] released today, has found that more than half of Australians surveyed (53 per cent) are unaware of changes to the life insurance cover provided through superannuation, which will come into effect on July 1st.

The changes are part of the Protecting Your Super package which is aimed at preventing unnecessary or unwanted erosion of people’s superannuation account balances by life insurance premiums. It does this by switching off cover for those accounts which are deemed ‘inactive’, due to receiving no contributions for 16 months or more.

The study also found that while 47 per cent of Australians surveyed are aware that there are changes coming into effect, only 1 in 5 (19 per cent) felt they had a good understanding of the changes’ impact, while 28 per cent said despite having heard of them, they didn’t know any details at all.

Adding to the confusion, one third (34 per cent) said they rarely or never open communications from their superannuation fund, resulting in one in four (26 per cent) having no idea what their balance is, and 44 per cent not knowing what insurance they currently have in place through their superannuation.

Those rarely or never opening communications from their super fund rises to 52 per cent amongst Australians aged 18-34, while those over 65 are unsurprisingly the most engaged with their super.

The study has also revealed an alarming disparity between people who have insurance in place through their superannuation, and those who are aware that they do.

According to data analysis from the Association of Superannuation Funds of Australia (ASFA), more than 85 per cent of Australians have life insurance in place through their superannuation[2], yet only 67 per cent of those surveyed believed they did, with the remaining third (33 per cent) saying they were certain they did not have those insurances in place.

Once made aware of the upcoming changes to superannuation, nearly two-thirds (63 per cent) of people with super said they were likely to go online or contact their superannuation fund to find out more, including 28 per cent who said they were very likely to do this.

The industry has developed an informative website, timetocheck.com.au, to act as a useful resource in educating Australians on how to check whether they’ll be affected.

According to Dr Martin Fahy, CEO of ASFA, the results of the study echo the concerns of the industry regarding Australians’ awareness of the potential impact of the changes on their level of life insurance cover through superannuation.

“This legislation has been introduced for very good reasons, however the timeframe for implementation has meant it has been challenging for superannuation funds to engage their members to ensure they understand the consequences of the changes in just a few short months.

“We already know Australians are not highly engaged with their superannuation – from the balance to the insurance products they hold – however this study demonstrates that the problem only becomes more acute when looking at those Australians most likely to be impacted by the changes,” Dr Fahy said.

Sally Loane, CEO of the Financial Services Council (FSC) said many Australians only hold life insurance through their superannuation, which provides an important safety net for individuals and their families if the worst should happen.

“The Protecting Your Super changes will help reduce account erosion through the additional fees and insurance that come along with unintended duplicate accounts. But this is also a timely reminder to check your super and make sure you have the right insurance for your circumstances.

“The easiest way to know if you’re affected is to open and read any letters, emails or SMS messages you receive from your super fund, but if you’re not receiving those it’s important you identify the fund and make contact,” Ms Loane said.

Overview of research results

  • Over three-quarters (78 per cent) of Australians have some form of superannuation account.
  • Amongst Australians with superannuation, four-in-ten (38 per cent) say they have a super account that has not received any contributions in the last 16 months.
    • This includes 33 per cent who say they have one account and 6 per cent who say they have more than one account that has not received any contributions in the last 16 months.
    • Men (42 per cent) are more likely than women (35 per cent) to have one or more super accounts that have not received any contributions in the last 16 months.
  • A third (33 per cent) of Australians with super have a good level of awareness of their current super balances as they monitor their accounts regularly, whilst a further 41 per cent generally have a rough idea of their super balance but don’t check it regularly.
    • The remaining one quarter (26 per cent) of Australians with super have no idea what their current super balance is.
    • Men are more likely than women to have a good level of awareness of their super balance and (39 per cent compared to 27 per cent), whereas women are more likely to have no idea (32 per cent compared to 20 per cent).
  • One quarter (23 per cent) of Australians with super know exactly what life insurance cover they have through their super, 21 per cent know they have some life insurance through their super but are not sure of the details, 33 per cent know they definitely do not have any life insurance cover, whilst a further 23 per cent are unsure of whether or not they have any cover.
    • Men are more likely than women to know exactly what kind of life insurance cover they have (30 per cent compared to 17 per cent), whereas women are more likely to not be sure whether they have cover or not (28 per cent compared to 18 per cent).
  • Only one in four (24 per cent) Australians with super always open the communications sent to them by their super company and carefully read the information or go through the balance and performance of their super account.
    • A further 37 per cent of people with super generally open the communications sent to them by their super company and have a quick scan of the information and account balance, 23 per cent say they occasionally open and read them but don’t always get around to it and one in ten (11 per cent) never read them and just put them in a pile of papers to be safely filed.
    • Men are more engaged in their super communications and are more likely than women to always open the communications sent to them by their super company and carefully read the information or go through the balance and performance of their super account (29 per cent compared to 20 per cent).
    • In contrast, women are more likely to say they generally open them and just have a quick scan of the information (40 per cent compared to 33 per cent).
    • Engagement with superannuation communications increases with age with Baby Boomers more likely than Gen X and Millennials to always open the communications sent to them by their super company and carefully read the information or go through the balance and performance of their super account (31 per cent compared to 21 per cent compared to 15 per cent).
    • In contrast, Millennials are more likely than Gen X and Baby Boomers to never read them and just put them in a pile of papers to be safely filed (16 per cent compared to 10 per cent compared to 9 per cent).
  • Just less than half (47 per cent) of Australians have heard that there will be changes to super coming into effect on 1 July 2019, with one in five (19 per cent) having a good understanding and 28 per cent uncertain about what the changes are.
    • Men are twice as likely than women to have a good understanding of what the changes are (26 per cent compared to 12 per cent), whereas women are more likely to have not heard of them at all (61 per cent compared to 45 per cent).
  • Only 15 per cent of Australians have heard of Protecting Your Super Package, Protecting Your Super Bill, or Protecting Your Super Legislation.
    • When prompted for details, only 23 per cent of people who said they had heard about Protecting Your Super Package, Protecting Your Super Bill, or Protecting Your Super Legislation could accurately identify any of the changes.
    • The remaining people who said they had heard about Protecting Your Super Package, Protecting Your Super Bill, or Protecting Your Super Legislation were unable to accurately identify any of the changes.
  • Once made aware of the upcoming changes to superannuation, nearly two-thirds (63 per cent) of people with super are likely to go online or contact their superannuation fund to find out more information with 28 per cent saying they are very likely to do this.

 

For more information or to arrange an interview with Sally Loane, CEO, FSC or Dr Martin Fahy, CEO, ASFA please contact:

Olivia Dovellos
Illuminate Communications
0420 686 233 / Olivia.dovellos@illuminatecomms.com.au

[1] This study was conducted on the YouGov Galaxy Online Omnibus between 22-24 May 2019, amongst a nationally representative sample of 1,026 Australians aged 18 years and older.
[2] ASFA Research Centre, based on APRA annual statistics (June 2019)