The Federal Labor Government has given the strongest indication yet that it backs the “stapling” measure that was introduced last year as part of the Your Future, Your Super reforms.

Financial Services Minister Stephen Jones announced Treasury will be reviewing the reforms but says the examination “will not unwind [the] stapling measures which reduce the proportion of duplicate accounts”.

The stapling measure is a recommendation from the Hayne royal commission’s final report in 2019 to the then Coalition Government. It is aimed at preventing workers from holding multiple super accounts and paying unnecessary group insurance premiums.

Under the change, it means an employee who already has an existing account will have the same fund “stapled” when they change jobs.

The Financial Services Council (FSC) says it welcomes the Government’s commitment not to unwind the stapling measures.

“Stapling is an important consumer protection and a key recommendation of the [Hayne] royal commission… and the Productivity Commission’s report into the efficiency and competitiveness of the superannuation system,” the FSC said.

But MLC Life Insurance has “strongly” encouraged Treasury to look at the stapling impact on vulnerable people, especially women.

The insurer says the measure is “positive in its intent” to reduce multiple superannuation accounts held by Australians but in practice it means members are required to be aware of the rules, take greater responsibility for decision making and therefore the consequences of their decisions.

About 60% of super members have never heard of stapling, potentially leaving them with inadequate or no life insurance protection when they change jobs, the insurer says, citing its recent research findings.

MLC says the impact of stapling will “disproportionately” impact vulnerable people – mostly women – who will have their life insurance cover ‘switched off’ if they are out of the workforce for more than 16 months resulting from the earlier Protecting Your Super reforms.

“When they try to re-join the workforce, because of stapling, they must make proactive steps to obtain cover again and, in some cases, they will not have access to the cover they once had,” MLC says.

“Many are unaware of the issue and vulnerable people are far less likely to have access to financial advice.”

MLC Chief Group Insurance Officer Mark Puli says the overall system of group insurance is delivering for Australians but reforms such as stapling need greater consideration for vulnerable people.

“The review of Your Future, Your Super is a positive development on many fronts, but the terms of the review must include insurance coverage,” he said.