Members should not be stapled to funds with inappropriate insurance

Superannuation members must not be stapled to funds with inappropriate insurance, Cbus has said in its submission to the Government’s Your Future Your Super legislation consultation.

While the industry fund said it supposed the need to reduce the creation of multiple accounts, it said members who joined the building and construction industry must not be stapled to funds with inappropriate insurance.

“Industry specific insurance is critical for building and construction workers. Cbus is a longstanding supporter of the existing industrial default system which sees building and construction workers defaulted into the fund that offers default cover designed for their industry,” the submission said.

Cbus noted many super members were not equipped to differentiate valuable industry-appropriate insurance form junk insurance.

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“Stapling a worker who is commencing a role in a hazardous occupation to a fund with inappropriate default cover for their needs would be a perverse, and no doubt unintended, consequence of this suite of reforms. Cbus will, therefore, seek to work with Government to address this issue,” it said.

“The elimination of multiple accounts is the stated focus of stapling reform – a worthy goal. Multiple accounts erode balances, and risk charging workers in hazardous occupations, including builders, police, paramedics and ambulance workers, premiums for insurance they can’t claim on.

“Defaulting workers and consolidating old accounts into a high performing fund with industry-appropriate default insurance from day one on the job is the outcome which is in the best interests of members who work in hazardous occupations.

“Cbus also encourages the government to consider lifting the threshold balance trigger embedded in the Protecting Your Super package to sweep more members’ funds into an appropriate active account.”