Australians urged to check their super funds for ‘severe’ fee increases

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Many Australians have been putting off looking at the bottom line of their super account. COVID-19 has wiped out fair chunks from many accounts, and while some are eagerly watching for a bounce back in their balances, others are preferring to take the long-term view – ignore what’s going on now and look for better days ahead.

And as if the cost of COVID-19 on your nest egg wasn’t enough, you’re now being urged to take a closer look at your super balance, as huge increases in insurance premiums and fees are about to kick in.

The increases have been labelled by The Guardian as “severe” and will come into effect by the end of the year.

An ABC report published by YourLifeChoices on Friday revealed how federal government plans to protect your nest egg may backfire.

The plan to remove the inequities in the super system will lead to the increased premiums, say super funds, with some fees for death and disability cover increasing by double digits and income protection insurance up by 60 per cent.

Millions of Australians do not regularly check their super accounts for new fees and charges. These are the people who will end up paying for expensive cover they don’t want or need.

One fund, Unisuper, increased its combined death and total and permanent disablement (TPD) cover by up to 17.8 per cent at the start of November.

AustralianSuper premiums also increased by around 20 per cent for members who hold income protection insurance. For younger members, that rise was 25 per cent.

Media Super members will cop a 62 per cent increase for income protection insurance next month, increasing monthly premiums for older members by more than $100.

Regular YourLifeChoices contributor Xavier O’Halloran said the increases were a red flag for consumers and has urged everyone to check their fund fees now, or risk big increases to premiums and less money in their savings.

“These increases are a timely reminder for people to check if they have insurance in super, what they are paying, what benefit it offers and under what circumstances it will pay out,” he said.

“For example, people might be surprised to find that income protection generally provides cover for temporary disabilities and not as the name might suggest for any loss of income.”

The Australian Financial Complaints Authority (ACFA) has already received a swathe of complaints, mostly from fund members who never knew they had insurance in the first place.

Many have since requested refunds for insurances they did not want or need.

The increase in premiums has angered many, and yet it is part of an industry and government attempt to make the system fairer.

Superannuation legislation changes that came into effect in April 2020 mean people under 25 or people with accounts under $6000 can opt out of paying insurance on all but one account.

And with fewer people paying super insurance, insurers have been forced to increase premiums for those who do pay.

“Superannuation funds have been putting a lot of these recently announced price increases down to changes which saw people no longer paying for insurance on duplicate, inactive accounts or in situations where cover may have been inappropriate [for example people who are unemployed],” said Mr Halloran.

“Overall, the changes are much fairer as fewer people are paying for policies they can’t claim on.”

Super guru Kirby Rappell says the challenge now faced by industry is to re-engage customers and help them understand how super works.

He said around 25 per cent of people with income protection insurance did not know they were paying for it, noting that this is why members need to read the fine print.

“This is around the time of year when funds send out annual statements to members,” Mr Rappell said.

“Ask yourself, do I have insurance? Check your annual statement and that will tell you what insurance you have and how much it’s costing you.”

Have you checked your super balance lately? Have you noticed any insurance premium increases?

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Written by Leon Della Bosca

Leon Della Bosca is a voracious reader who loves words. You'll often find him spending time in galleries, writing, designing, painting, drawing, or photographing and documenting street art. He has a publishing and graphic design background and loves movies and music, but then, who doesn’t?



Total Comments: 12
  1. 0

    “Have you checked your super balance lately? Have you noticed any insurance premium increases?”

    We checked the balances recently as we have just changed our fund. Our previous fund decided that they would not invest in those things that the do-gooders consider wrong such as coal and gas. We believe that super funds and banks are in the business of doing the best they can for investors and shareholders and that dabbling in politics is not what they should be doing.

    • 0

      Why is investing in renewables within your super considering playing politics, it’s a smart move. A lot of fund managers like Black Rock and Vanguard have scaled back on Fossil Fuel options, although a long way to go. You also don’t have to sacrifice performance either, these options perform well.

    • 0

      I don’t have a lot of super but I will not support anyone who continues to invest in things which destroy the planet – such as coal and gas. The government needs to look to the future and we need to look to the planet we are leaving for our kids and more importantly the future generations we have left for them. There is not one reason super funds cannot invest in things which are good for the planet on which we all must live and doing so can actually bring better returns than the archaic investment strategies.

    • 0

      McDaddy & Joyful56, I accept that you have a personal choice as do I. I don’t criticise your choices and I think it would be good manners to allow me my choices.

    • 0

      No-one is stopping you from exercising your choice Horace Cope, just pointing out that it may be a little short sighted. But good luck to you.

    • 0

      And your derogatory comment is most unwelcome, McDaddy.

    • 0

      You give as good as you get Horace, so off your high horse.

    • 0

      I never thought I would see the day that anyone would consider the ‘big 4 banks, who are all stopping coal financing by 2030- 2035 would be considered ‘dogooders’. Time are changing indeed as most super funds would include such big 4 bank shares.

  2. 0

    No surprises here!. Rogues! Seems everyone wants to get their hands our money!
    I’m currently in the process of finding out how to access some or all of the balance of my super (pending job loss coming) & it is astounding that if I’m separated from my employment (regardless of circumstances) I will charged MORE in admin fees, investment fees etc than I’m being charged wild I’m employed & contributing- even if i do nothing as far as accessing any of it! How can they do this? My old super company 20yrs ago froze or severely reduced all fees when i was unable to contribute to it as they should! I was also told that if i wanted to engage a Strategic Planner from this company/fund to help me decide what to do for my future financial situation, it would cost me around $4,000, yes $4,000 (& that’s without the ongoing/regular charges if i decide to let this company manage it for me!)
    I’m still unsure if i have employment or not so have not done anything yet while I wait but wondering if it be better off rolling it over to another company but that also takes a lot for me to get my head around as far as comparisons, etc & not confident that I’ll be able to do this properly & no doubt miss something & get ripped off anyway!
    I’m 59 so there will also be 17% tax on half of it if i take it all! Looks like I’ll be on the unemployment line but that pays $560 per fortnight, so how do people even afford food & housing (no chance of keeping a car even) on that has got me beat! No wonder people suicide, theres little hope for you if you dont have decent employment, the cost of basic living is just outrageous!

    • 0

      You won’t pay the tax if you roll it into another fund. I’d spend the time you have now to investigate other funds. There are plenty of low cost superfunds and if you find one it is a very simple form to fill in to make the change. Your current employer does not have to agree! All you have to do is tell them where to make your payments.

      And I would also suggest you look for an independent planner – one NOT linked to a bank or your superfund. You can make appointments for free for the first meeting to find one you like. At 59 you need a plan wherever you choose to get it.

  3. 0

    Still happy to be out of Super, to keep track of all the changes just not work for me. I spend what we have and then maybe the full age pension. Different for younger people maybe but then they are not that interested in super either – too far away for the reward, I think.

  4. 0

    Goverment-super bad for us



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