Latest MySuper tranche lacks insurance standards

Conditions around standard insurance options in MySuper products have not been clarified by MySuper tranche three and have no legislative basis, according to King Wood and Mallesons partner Michelle Levy.

Levy said the industry would need to rely on the bill's explanatory memorandum, which allowed for various insurance terms and conditions within a MySuper product despite the product's aim to provide the same level of options, rights and benefits to members.

"What you've got is no legislative basis, but there is commentary in the explanatory memorandum which is similar to FOFA (Future of Financial Advice) where the explanatory memorandum probably does go further than the law, and everyone will need to rely on this in order to do what it is that the regulator thinks they can do.

"They specifically envisage that there will be different terms and conditions within your MySuper product for employees of an employer and former employees of an employer," she said.

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Levy said despite industry criticism, the Parliamentary Joint Committee had decided there was enough time between now and the implementation of the bill next year for super fund trustees to contact members.

Accrued default amounts were the other cause of contention for super fund trustees, according to Levy, due to unengaged members and members who had actively chosen the default fund being lumped together.