24 Sep 2019
By Public Policy Manager, Benedict Davies
Changes to insurance and super pass Senate
Those of us working in super policy have been kept busy this month with the Government bringing several super and tax bills before Parliament. Say what you will about politicians, but they do work unsociable hours, with debate taking place over many weeks and starting early in the morning and ending late at night.
Protecting balances from being unnecessarily eroded by insurance premiums
The first super bill of note debated was the Putting Members' Interests First Bill (PMIF). This bill’s proposed changes included that insurance be offered on an 'opt-in' basis for new members under 25 years of age and those with account balances below $6,000. This is a significant change from the current arrangement where new members automatically receive insurance cover and must formally ‘opt-out’ if it’s not required. Under the bill, existing members could also lose their insurance cover if they have an account balance below $6,000.
Ultimately, the Government managed to get the bill through with amendments - a different start date than initially proposed and exemptions applying for members working in risky occupations.
This legislation will apply from 1 April 2020 and will affect a large number of our members. We’ll write to you if you’re affected and provide you with instructions on how to keep your cover (if you wish to) and will of course update our disclosure documents to outline these changes.
The Treasury Laws Amendment (2018 Superannuation Measures No. 1) Bill 2019
The second super bill that passed the Senate was the Treasury Laws Amendment (2018 Superannuation Measures No. 1) Bill 2019. This bill gives employees with more than one employer the ability to negotiate an exemption from receiving specific super contributions to avoid breaching their concessional contributions cap.
Once the law has received Royal Assent (the Sovereign’s formal sign-off as it were), eligible members can apply to the ATO for an ‘employer shortfall exemption certificate’.
It’s important to note that the ATO has the ability to refuse an application for an exemption. For example, I understand it’s unlikely they would issue a certificate in circumstances where a person is receiving mandatory contributions above the 9.5% superannuation guarantee.
This legislation is complicated because it doesn’t change an employer's obligations under a workplace award or agreement or an employer's agreement with their super fund. Additionally, even if you're successful in obtaining a certificate—an employer can disregard it.
In light of this, it would be best to check with both the ATO and your employer if you're eligible.
There’s likely more changes to financial services to come
The sitting of both Houses is currently adjourned; however, both Houses return on 14 October and it’s likely that the Parliament will soon be dealing with tranches of legislation following on from the recommendations for the Royal Commission.