"Making insurance in super opt-in rather than opt-out for people who are at greatest risk of being fleeced will make a huge difference to the retirement savings of millions of Australians," says CHOICE CEO Alan Kirkland.
The change will see life insurance within superannuation made opt-in for people with balances of less than $6,000, people under the age of 25 and those with inactive accounts that have not received a contribution in 13 months. Government modelling shows this could save $3 billion in premiums, which will instead go to the super balances of 5 million people.
"Billions will flow back to consumers, away from the bottom line of the big banks and life insurers. The real impact won't be felt by individuals until they retire, but when they do it will mean tens-of-thousands of dollars more in savings," Mr Kirkland says.
"For too long the fledgling savings of young people have been depleted by crudely designed life insurance policies that they often don't even realise they are paying for.
"We've seen young people being charged for $200,000 in default death cover that will never have any value if they don't have dependents, and unemployed people paying for income protection policies that they cannot claim against.
"People who decide they want insurance will still be able to opt in but this will stop millions more being charged unnecessary premiums."
The Federal Government has also announced that the ATO will now auto-reunite people with lost accounts and inactive accounts with low balances. The change is estimated to see 3 million people reunited with $6 billion of their savings.
"We welcome renewed efforts to reunite people with their lost super as it will have the biggest impact on those who are currently missing out on the full benefits of the superannuation system," says Mr Kirkland.
"The people who are most likely to have lost accounts are people on low incomes, people in casual or insecure work, and women. At the moment it's up to them to track down and consolidate their super but now the ATO will take on that responsibility for people who have inactive super funds with less than $6,000 in them."
CHOICE also welcomes action on its call to ban exit fees on superannuation funds.
"Exit fees penalise people who take action to consolidate their super or switch to a better performing fund. They currently hit Australians' super to the tune of $37 million a year. We'll be glad to see the end of them," Mr Kirkland says.
Media contact: Tom Godfrey, CHOICE, Head of Media and Spokesperson: 0430 172 669