Rice Warner has joined industry in warning too many account-holders will be caught up in renewed government attempts to pass insurance-in-superannuation legislation.

The legislation will make life insurance an opt-in for under-25s or people with less than $6000 in super. A previous bill – passed with amendments brought by the Greens – removed insurance for accounts that are inactive for 13 months.

Rice Warner argues many super members aged under 25 will not have built up account balances above $6000 due to low salaries and intermittent work patterns.

Those on lower salaries require insurance most because they include those returning to work or working part-time, migrants and people waiting for old accounts to roll over to new ones.

It is urging the Government to remove the $6000-balance aspect of the legislation. It also wants the Government to defer implementation of the changes until the start of the next financial year.

New fund members will be caught in the legislation because their accounts won’t have reached the required cut-off, Rice Warner says.

It says while its research suggests younger super members are paying an unreasonable share of overall group insurance costs, this can be fixed by funds continuing to reshape premium rates to reduce significant cross-subsidies.

Account erosion is a legitimate concern, but that should not lead to the conclusion that insurance should be removed for under-25s, it says.