The Actuaries Institute has voiced concerns at certain aspects of the draft regulations for a raft of proposed reforms to the superannuation system, saying they have implications for Australians who have group insurance.

It says the planned stapling measure may lead to many members losing valuable group cover benefits.

“This is of particular concern for members entering dangerous occupations,” the institute says in a submission to Treasury.

The so-called “stapling” measure aims to put an end to workers having multiple super accounts, thereby eliminating the need to pay numerous fees and insurance premiums. Under the proposed change, employers will be required to make contributions to an existing fund of new employees unless they decide otherwise.

If new employees do not decide on a new fund, employers are no longer allowed to automatically create a new super account in their chosen default fund. Employers instead have to obtain information about the employee's existing fund from the Australian Taxation Office, if it is not provided.

The institute says it is also concerned with the annual performance test of products as set out in the draft regulation.

The test “functions more like a consumer product” assessment and does not consider the level or cost of insurance cover.

“Insurance in superannuation is an important product feature,” the submission says. “Whilst we understand the difficulty in including insurance, given the many variables, we believe that this is a reason why a product failing the performance test may not necessarily be an appropriate product for the member concerned.

“Insurance should therefore be recognised when assessing whether a failure to meet the performance test measures means the fund is not promoting members’ financial interests.”

The institute has insurance-related concerns too with the notice wordings for the annual performance test.

It says the notice makes no mention of insurance cover and the risk of losing valuable cover if the member switches to a new super fund. The risk is especially high for members in dangerous occupations.

“This is opening up the superannuation system to consumer complaints and litigation,” the submission says. “There must be a separate section on the notice covering insurance.”

Submissions to the Treasury consultation closed last week.

Click here for the institute’s submission.