POWERED BY MOMENTUM MEDIA
Claim information could indicate proportion in ‘dangerous occupation’
Superannuation funds could use past claim information to provide an indication of the proportion of members that fall under the ‘dangerous occupation’ category in the lead up to the commencement of the putting members’ interest first act, according to Rice Warner.
In an analysis, the research house said one of the challenges for funds when the Treasury Laws Amendment Putting Members’ Interests First (PMIF) Act 2019, is implemented on 1 April, 2020, would be to assess the impact of having, or not having, the dangerous occupation exemption on its membership.
While the first step was to find out how many members a fund had in dangerous occupations, the biggest hurdle was the lack of information.
Rice Warner said funds often did not know members’ occupations until claim time but that this could be useful to give an indication of what proportion was in a dangerous occupation.
“Even though the cohort of claimants may not necessarily be representative of a fund’s total insured membership, it can provide an indication of how many past claimants with a dangerous occupation would not have default cover post-PMIF. This proportion will vary from fund to fund,” it said.
Rice Warner also said other key considerations for the new rules were the availability of the information, the ease of explanation and administration as well as the risk involved.
“There are potentially many different options open to a trustee which could give different outcomes not only for the cover provided to the individuals impacted but also to the cost of cover for all members,” it said.
“Some of the considerations include the actual date that cover starts, the date of measurement of at work status, use of exclusions and any need for SG contributions to be received.”
Rice Warner noted that members could be left confused and unaware of whether they had cover and what terms applied.
“Providing clear wording and visual illustrations can make communication simpler. It will be a challenge for most funds to think through and develop these eligibility rules and pathways of obtaining cover to ensure the rules are as exhaustive as possible, capturing the various scenarios a member can be in,” it said.
It said that trustees also had to consider their responsibilities under Prudential Standard SPS 250 Insurance in Superannuation (SPS250) which was due to be amended from 1 July, 2020.
“One of the proposed new requirements is that a status attributed to a beneficiary in connection with the provision of insurance must be fair and reasonable,” Rice Warner said.
“It would therefore be prudent for trustees to consider how the new requirements could impact changes being made to accommodate PMIF.”
Recommended for you
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.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
Spire Oaktree Opportunities XI Second Close
61.07 3 y p.a(%)
2
Spire Oaktree Opportunities XI First Close USD
59.21 3 y p.a(%)
3
DomaCom Lot 21 Chellaston Road Munno Para West SA 5115 Australia
31.56 3 y p.a(%)
4
Fidante Credit Suisse Global Private Equity
31.06 3 y p.a(%)
5
DomaCom 4/27 Crombie Avenue Bundall QLD 4217 Australia
26.81 3 y p.a(%)
