Research from MLC Life Insurance has revealed 60% of superannuation fund members have never heard of the superannuation stapling reforms, potentially leaving them with inadequate or no life insurance protection when they change jobs.
The reforms, which came into effect on 1 November 2021, required employers to make superannuation contributions to an existing fund for new employees, unless the employee decided otherwise.
More than 70% of Australians held life insurance inside superannuation. In 2021, 45,000 claims worth $3.7 billion were admitted for life and total and permanent disability (TPD).
Mark Puli, chief group insurance officer at MLC Life Insurance, said the research showed superannuation funds and their insurers needed to improve how they explained these reforms to members.
“It’s disappointing to see most members are unaware of stapling. We understand and support the intent of these changes - to reduce the number of Australians with multiple superannuation accounts - but in practice it means people won’t have the right cover for their circumstances,” he said.
“The average Australian changes jobs 12 times throughout their lifetime. In that time, they may get married, have kids, buy a home, and take on more debt. It’s imperative that members have the right cover for their needs and if they aren’t prompted to review it, they simply won’t.”
The survey of more than 1,500 members also showed that women were less engaged than men with their insurance with 37% of women saying they were engaged with their insurance, nearly 10% lower than men.
Under the reforms, if women took time out of the workforce to care for children for more than 16 months, their default life insurance was automatically switched off.
In other findings, the survey revealed:
The insurance company has joined this year’s awards as a principal partner.
The $135 billion fund has transitioned away from TAL Life Insurance following an “extensive tender process”.
The $80 billion fund is facing legal action over allegedly signing up new members to income protection insurance by default without active member consent.
In a Senate submission, the Financial Services Council has once again called for further clarification that the government will assess the consumer outcomes of group insurance against the enshrined objective of superannuation.