The Federal Government will address insurance concerns caused by the introduction of the stapling measure, after stakeholder feedback to a Treasury review of Your Future, Your Super reforms says the change may have led to “inappropriate” coverage for workers.

“It is important that members are insured appropriately, and the Government will continue to work with stakeholders and Treasury to ensure that members get the best possible outcomes,” Financial Services Minister Stephen Jones said in a statement.

“The Government is committed to stapling, the eradication of unintended duplicate accounts, and will work with Treasury, the regulators and stakeholders to deliver on its goal.”

The stapling measure, a recommendation from the Hayne royal commission, aims to prevent the creation of unintended multiple super accounts when disengaged members change jobs and open a new account by default.

Unintended multiple accounts result in members being subject to multiple sets of account fees and potentially duplicate insurance arrangements, which ultimately erode retirement savings.

Before the measure commenced in November 2021, when an individual changed jobs and did not choose a preferred superannuation fund, the employer could open a new superannuation account for the employee using the employer’s ‘default’ fund.

However, the measure also means workers starting with new employers may have inappropriate insurance cover within their stapled superannuation account, particularly those moving to high‑risk occupations, according to a Treasury summary of feedback to the review.

“Stakeholders have raised concerns around employees having inappropriate insurance arrangements within their stapled superannuation account when changing jobs,” the Treasury summary says.

There are a few reasons why the situation may arise, according to the summary.

For under-25 super members or those with less than $6000 in their accounts, they do not have automatic default cover under changes introduced in July 2019. This means when they move to a high-risk occupation, their existing stapled fund may not have insurance cover as they did not opt-in.

Alternatively, their new employer’s default fund could have provided insurance automatically under the dangerous occupation exemption to that legislation.

The summary also notes occupational exclusions or restrictive definitions that do not provide cover for the new occupation, or inappropriate sum insured amounts for their new occupation.

The purpose of the Treasury review, which closed on October 14 last year after a months-long consultation, also looked at other changes introduced by the Your Future, Your Super reforms including MySuper products performance.

Click here for more from the Treasury summary.