‘Total and permanent disability’ (TPD) insurance is an insurance product that lets you claim benefits if you become sick or injured...Read More
Starting a new job looks a little different in 2021. Chances are, instead of being shown to a new desk or office, and finding out where the coffee machine (and office chocolate stash) is, you’ll be sitting at your desk – in your home office- drinking coffee you made in your kitchen! Bonus points if you forget to ‘unmute’ yourself on Zoom or Teams before 10am on your first day. Something else that looks different? Your super! It’s a common misconception that when you start a new job, you have to change your super fund. If it’s been a while since you were a workplace newbie, you may even remember that if you didn’t tell your employer which super fund you wanted your contributions made to, they could choose one for you! However, from 1 November 2021, as a result of recent Australian Government ‘super stapling’ changes, you’ll be in the driver’s seat – so
• you can provide your new employer with the details of your current or preferred fund – easy!
• if you don’t nominate a fund for whatever reason (maybe you’ve lost or forgotten your details- it happens!), your employer will need to contact the ATO to determine whether you have an existing account, or
• you can opt to have your new employer open another superannuation fund for you.
This change is intended to end the situation many of us are familiar with – ending up with multiple different super accounts that get eaten away by administrative fees and charges. Your ‘stapled super fund’ will follow you through various jobs. However, it’s important to remember that if you only have one super fund, it has to deliver on all of your particular needs – now and in the future. This blog provide some helpful hints on what to look out for.
Let’s go back to basics first. If you’re thinking of moving to a new super fund, and/or consolidating a bunch of different accounts, here are some things you might want to think about:
• what insurance and other protections do you need in light of your own personal circumstances? These might include things like income protection, total and permanent disability (TPD) insurance and death benefits, and
• if you’re moving a number of balances into one account, were there any benefits to those accounts that you want to preserve? Remember, insurance policies differ between funds, so you may want to read the fine print to make sure you pick the one that’s right for you.
It might be worth talking to a financial expert about your super needs, including insurance that you might require. You can also access information about how funds are performing on the ATO website using the YourSuper comparison tool. It is important to compare ongoing fees and charges of your fund, research its long-term performance, and consider the insurance options available for you.
If you’re a contractor or self-employed? Yes! The way we work is changing, and as a result we may not be traditional ‘employees’ – but rather, you may be self-employed or engaged as a contractor. This will impact how your super is paid. You’ll generally be responsible for making super contributions – although it’s worth checking that you meet the criteria to be a genuine ‘contractor’ rather than an employee, as there’s a fine line between the two. If you choose not to make super contributions, your account may become inactive and you could lose insurance that comes with it.
It is important to take stock of your insurances as your life changes, as you may find you are not covered for what you expected when the unexpected happens. If you move to a new super fund, be sure to compare the changes and expect to have new wait periods on new policies. Super funds typically have three types of insurances policies attached to them. They include:
• TPD insurance, which covers you if you are unable to work because of illness or injury. TPD insurance products differ from super fund to super fund
• life insurance, which can provide a lump-sum payment to your super fund if you die or become terminally ill. It can assist your family or loved ones to pay for financial costs and future living expenses, and
• income protection insurance, which can provide temporary payments or benefits if you are temporarily unable to work because of illness or injury.
FYI: The ‘super stapling’ change is part of the broader ‘Your Future, Your Super’ reforms that the Australian Government introduced in 2021 that are designed to create greater transparency around super, and how your super fund is managing your money! The idea is that less fees and charges equals a higher super balance, leaving you better off in retirement. These reforms are complemented by another package of changes called ‘Putting Members’ Interests First’ which are designed to ensure that people with super accounts that are inactive or have low balances aren’t paying for insurance they don’t need. Want the full lowdown on the latest super news? Jump over here!
If you have an illness or injury that prevents you from working, you might be worrying about how you are going to pay your bills and put food on the table. You could be entitled to receive a TPD lump sum, as well as other insurance benefits. Get in touch with Littles for a free super claims check. We can help you understand what you’re entitled to. Know where you stand, and get peace of mind.