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Industry steps up super reform awareness drive

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The Financial Services Council (FSC) and the Association of Superannuation Funds of Australia (ASFA) have launched a joint campaign to encourage people to check their group life cover arrangements ahead of legislative changes.

From July 1 automatic life insurance will be removed from accounts that have been inactive for at least 16 months.

ASFA research shows 53% of Australians are unaware of changes to life cover provided through super, and only 19% understand what the changes mean for their retirement savings. About 23% are unsure if they have life insurance, and 44% don’t know what cover they have through super.

About 38% of consumers with superannuation say they have an account that has received no contributions in 16 months.

FSC CEO Sally Loane says consumers should watch for letters from their super funds, so they can take action if needed.

Disengagement from superannuation is a perennial problem for the industry. About 34% of account-holders say they rarely or never open communications from their fund. The figure is even worse among Australians aged 18-34 (52%).

“The timeframe for implementation has meant it’s been challenging for superannuation funds to engage their members, with the impact of the changes in just a few short months,” ASFA CEO Martin Fahy said.

“Our primary concern is for those Australians who have and need insurance through superannuation, and may not realise they will be affected by these changes on July 1, potentially finding themselves without insurance cover when they go to claim.”

The TV, digital and social media push comes as insurer AIA runs a media campaign urging members to stop inactive super accounts being shut. AIA says more than $500 million of life payouts are made from inactive accounts each year.