Putting Members Interests First (PMIF) Legislation
In addition to the recently introduced (1 July 2019) Protecting Your Superannuation (PYS) legislation, parliament has passed further legislation that will have the effect of restricting and cancelling insurance policies held within superannuation accounts.
As a result of PYS legislation, any superannuation account that has not received an eligible contribution for 16 months or more is now considered ‘inactive’ and will have all associated insurance policies cancelled, unless an active election to opt-in to retain those insurances is made to the trustee.
We have previously expressed our concerns in relation to implementation of such a blunt instrument as the PYS legislation, and some of the unintended consequences we anticipate to arise as a result, which you can read about in our previous article here: Disaster waiting to happen?
From 1 April 2020 the newly introduced Putting Members’ Interests First (PMIF) legislation will come in to effect. This legislation will introduce two further measures that will restrict and cancel insurances held within superannuation accounts as follows:
Low Balance Accounts (below $6,000)
In a similar fashion to PYS legislation, any superannuation account with a balance of less than $6,000 will have all associated insurance policies cancelled, unless an active election to opt-in to retain those insurance policies is made to the trustee before 1st April 2020.
Under Age 25
For individuals under the age of 25 who join a new superannuation fund, automatic insurance will no longer be issued until both the account has a balance of $6,000 and the account owner attains the age of 25. New superannuation fund members can however ‘opt-in’ to establishing insurances within their superannuation account at any time.
The introduction of PYS and PMIF legislation will restrict and reduce levels of automatic insurance benefits held in superannuation accounts. It is therefore more important than ever to consider the levels of insurance cover you (or your loved ones) have in place, and to seek advice on the types, amounts, and quality of policies held.
We are experts in assisting clients to assess their insurance needs, and to establish appropriate levels of high quality personal wealth protection insurance that can be relied on in case of disaster. Please contact us if you would like to discuss your circumstances, or if you wish to arrange a meeting.