Default insurance arrangements will remain for superannuation fund members aged under 25 or with low balances, following amendments to the super reform bill last week.

The Coalition was forced to accept changes from the Greens to have the bill passed in the Senate.

The proposed bill would have removed default life cover from all members aged under 25 or with low-balance accounts, and was opposed by the insurance industry.

A fee cap of 3% will now apply to accounts below $6000.

Industry Super Australia Deputy CEO Matt Linden has criticised the amendments.

“It was disappointing explicit changes intended to protect young and low-balance members from unnecessary insurance were completely dropped from the final bill,” he said. “While additional safeguards were definitely required, removing the provisions completely was not necessary.

“Industry super funds will strive to ensure default insurance arrangements remain cost-effective and matched to the insurance needs of members.”

Inactive accounts – 16 months with no activity – will still be automatically consolidated.

The government will continue trying to pass legislation on default cover for under-25s and low-balance accounts through Parliament.