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New laws designed to protect your super from 1 July 2019

Super | | 2 min read

To protect the super balances of all Australians being eroded by unnecessary fees and costs, the Federal Government has introduced the “Protecting Your Super” reforms (formally titled Treasury Laws Amendment (Protecting Your Superannuation Package) Bill 2018), which passed on 18 February 2019. This new legislation will apply from 1 July 2019. It includes cancelling insurance for inactive members, changes to fees, and new powers for the Australian Taxation Office (ATO) to transfer and hold inactive, low-balance accounts.

We recently contacted members whose accounts will either be classed as inactive on 1 July 2019 or are at risk of becoming inactive at a later date if they don’t take action.

Cancelling insurance

To prevent inactive super account balances being unnecessarily reduced by insurance premiums, super funds will be required to cancel some members’ insurance.

An inactive super account is one where no employer contributions (e.g. Superannuation Guarantee, salary sacrifice), personal contributions (e.g. voluntary, spouse), or transfers/rollovers from other super accounts have been received within 16 months or more.

You’ll receive warning letters if your super account is at risk of becoming inactive.

Changes to fees

Fees will change in two ways from 1 July 2019:

  1. Exit fees, including fees for partial withdrawals, will be removed from all super accounts.
  2. There will also be a 3% cap on administration and investment fees on super accounts with balances below $6,000.

The ATO: transferring and holding inactive accounts

If your account has been inactive for 16 months and you have a balance less than $6,000, it will be transferred to the ATO. They will attempt to transfer your super to an active super fund (if you have one, and where the transfer would take your total balance to $6,000 or more).

You won’t be charged any fees by the ATO, and your super will earn interest based on the consumer price index (CPI) while they hold it.

What can you do?

Please contact us if you’re not sure what you should do (if anything), and maybe consider getting advice to help work out what’s right for you. And our Insurance needs calculator is a handy first step to help work out your insurance requirements.

Catholic Super’s financial planners don’t receive any bonuses or commissions, so their only goal is to give you confidence in your financial choices. Our planners can help you with a comprehensive evaluation of your current financial state and give advice for your future. If you haven’t met with one of our financial planners before, your initial discussion is included in your membership. Any additional costs will depend on the complexity of your financial situation and financial plan.

You can keep your insurance cover by organising one of the contributions listed above*, or by making your request in writing. You’ll need to do this every 16 months even if you’ve previously requested to keep your cover.

To stop your account being transferred to the ATO, you have a few more options. Either:

  • Combine your super accounts so your balance is more than $6,000 (find out how to grow your super)
  • Make a contribution* or speak to your employer about contributing to your account
  • Change your insurance, or
  • Nominate a binding beneficiary for your super (if you haven’t done this already).

Your account also won’t be transferred to the ATO if you’ve changed your investment option in the last 16 months.

Are there any other changes?

Due to this new legislation, and the number of insurance claims Catholic Super has received, we’ve reviewed the Income Protection cover we provide members from 1 July 2019, and the cost of providing this cover.

The legislation changed from its original proposal in the 2018 Federal Budget. This means that the Government intends to introduce a separate bill to deal with future insurance reforms. Please refer to the ATO for details on its new responsibilities, or the Federal Register of Legislation for a copy of the Treasury Laws Amendment (Protecting Your Superannuation Package) Bill 2018.


* To be eligible to make contributions into super once you are over the age of 65, you must have been gainfully employed for at least 40 hours in a period of not more than 30 consecutive days during the same financial year in which the contributions are made.

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