The new financial year has been hailed in with a request from Scott Morrison, Treasurer, to commence the final stage of the Superannuation system review, with a draft report due in January 2018, and the final report due one year from now on 1 July 2018.
The review will cover the usual superannuation suspects around costs, fees, and net returns (eg should there be increased disclosure? Would increased disclosure actually improve outcomes for members? What are the implications of exit fees? Should something be done to address account erosion for low account balances? Should costs and fees be tailored for different member segments?). Also (and interestingly), the review will cover insurance in superannuation.
Specifically, the Treasurer’s announcement identifies key terms of reference for insurance in superannuation to:
- consider the appropriateness of the insurance arrangements
- consider the extent to which policy settings offset costs to government in the form of reduced social security payments
- consider whether policy changes could improve insurance cover so that it:
- provides value for money
- does not inappropriately erode retirement savings of members of all ages
- delivers consistent outcomes across the system and
- ensure insurance is not a barrier to account consolidation.
We know that various industry groups are already considering group insurance in superannuation, account erosion for members with low balances, and when insurance represents good value for default members. So, if you’re wondering what the next big changes for superannuation might be, we suggest you watch this space.