The Treasury’s proposed changes to transfer lost members’ superannuation accounts to the Australian Taxation Office (ATO) could strip members of their insurance coverage, says the Association of Superannuation Funds of Australia (ASFA).

In a submission to the Treasury, ASFA says it is concerned the proposed legislation, which will see people whose accounts have been inactive for five years transferred to the ATO’s jurisdiction, will result in a loss of life insurance cover.

“There has been some concern expressed by ASFA members that this may lead to complaints that trustees had not done enough to find the member,” the association said.

“ASFA recommends that further guidance be issued including an indemnity to trustees insofar as the potential loss of insurance cover for members that may occur.”