MySuper members can use permanent incapacity insurance on an “own-occupation” basis, the Australian Prudential Regulation Authority (APRA) has confirmed.

The Superannuation Industry Supervision Act requires funds to provide permanent incapacity benefits on an “any-occupation basis”, the regulator says.

Trustees must be satisfied that members are unlikely to undertake “gainful employment for which the member is reasonably qualified by education, training or experience”, according to a briefing note.

“If a member becomes permanently incapacitated on an ‘any-occupation’ basis, they usually will also be unable to undertake their own occupation at the time of injury. Accordingly, they would ordinarily be entitled to a payout under the ‘own-occupation’ policy.”

However, APRA warns if members are permanently incapacitated on an own-occupation basis, payouts will not be released by the fund.

The supervision act requires funds to phase out own-occupation benefits before July 1 next year unless members have the coverage on a continuing basis.

APRA has also confirmed that policies with additional benefits can be used to support the provision of permanent incapacity benefits to MySuper members. This includes benefits such as loss of limb, even when it does not result in permanent incapacity on an any-occupation basis, the regulator says.

But again, if members can work in their own occupation, benefits cannot be released from the fund.