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REST head rubbishes MySuper insurance risk claim
Funds with properly designed MySuper products should not run into situations where members lose substantial amounts of insurance cover, a super fund CEO said.
REST chief Damian Hill said any MySuper-corresponding insurance benefit should be broadly equivalent with a fund member's previous arrangement.
"I think that is just an excuse being made by those who don't want to convert their members across," Hill said.
Hill's comments come after Corporate Super Specialist Alliance president Douglas Latto said members had had their cover halved after moving into a MySuper product.
He argued for an opt-in option for super fund members who were at risk of losing a big portion of their insurance benefits.
But Hill said the very purpose of MySuper is to cater to people who have not been engaging with their super, and was designed for those who have not made a choice.
"If people have got cover, then I would've thought the MySuper option should have been looking into closely replicating it. It may not be able to do it identically because you've got to average it over a whole heap of members but the broad principles behind that cover should be in place in a MySuper environment."
On member engagement, Hill said getting young Australians in the 18-29 age brackets to engage with their super will be difficult even if funds change their communication and engagement methods.
"It brings into light the importance of having a default system and a strong level of defaults for young people so they do get reasonable outcomes even if they don't engage until they've got a mortgage, or got into a relationship, and start taking more of an interest perhaps in their 30s," he said.
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