The new Protecting Your Super government reforms aim to protect Australians’ retirement savings from being eroded by fees and insurance premiums.
Some of the major changes that came into effect on 1 July 2019 are:
Changes to Insurance
If you’re currently paying insurance premiums from your Essential Super account and you haven’t had any contributions or rollovers to your account in over six months, you may have received a letter from us, in April, asking if you’d like to keep your insurance cover. If you have not submitted an election to keep your insurance cover, from July 1, we will write to you once you reach 9, 12 and 15 consecutive months of inactivity.
Inactive Account Transfer
If your super account has a balance under $6,000, which hasn’t been active for more than 16 months, we’ll contact you in August so you can let us know if you’d like to keep your Essential Super account before your account balance is automatically transferred to the ATO in October.
Changes to Fees
If your super or pension account has a balance under $6,000, you’ll automatically receive a refund of any fees over the 3% fee cap. We’ll assess your Essential Super account at 30 June each year, or when you leave the fund.
Under the new legislation, we must cancel insurance cover for Essential Super accounts that have been inactive because no money has been added to the account (e.g. a contribution or rollover) for 16 continuous months.
If you decide to keep your insurance with Essential Super, you’ll need to let us know before the end of your 16 month period of inactivity (e.g. no money via a contribution or rollover) by either:
Yes. If your insurance is cancelled, and you decide that you want to keep it, you have 90 days from the date your cover is cancelled to reinstate your cover. Cover can only be reinstated if there is enough money in your account to pay premiums from the date your cover was cancelled.
You can reinstate your insurance by completing the Insurance Reinstatement Form and mailing it to Essential Super, Reply Paid 86495, Sydney NSW 2001. Alternatively, you can upload a scanned copy of the completed form via NetBank.
The fee cap aims to protect low-balance super and pension accounts by limiting the fees you pay – giving your super the best chance to grow. It caps total administration fees, investment fees and indirect costs for accounts with balances below $6,000, to a maximum of 3% each year.
The following fees aren’t capped:
We’ll assess all active Essential Super accounts against the fee cap criteria during the fund’s annual review, on 30 June each year.
Yes. If your balance is under $6,000 and you set up a pension account using your Essential Super balance, your account will be assessed against the fee cap and you may be entitled to a refund of any excess fees.
If you’re entitled to a fee refund, we’ll send you a statement confirming the amount, and where it’s been paid to, within 3 months of you closing your account.
For example, if you rolled over your super to another account, we’ll also roll over any fee cap refund into the same account. You’ll then receive a statement confirming the payment once the transaction has been processed.
Your super account could be considered an ‘inactive low-balance account’ if:
To check your current Essential Super account balance, simply log into NetBank.
We’ll assess potential inactive low-balance accounts twice a year as at 30 June and 31 December. Unless you tell us not to, we’ll transfer these accounts to the ATO in April and October each year.
You won’t be charged any fees on your Essential Super account once it has been closed and transferred to the ATO.
If you’d like to keep your Essential Super account, you’ll need to make sure it’s no longer considered an ‘inactive low-balance account’.
To do this, you can:
You can also opt out of the transfer by completing an Inactive low-balance account declaration form and return it to us by Friday 27 September 2019. Please mail the completed form to Essential Super, Reply Paid 86495, Sydney NSW 2001. Alternatively you can upload a scanned copy of the completed form via NetBank.
If your super is transferred to the ATO, the ATO will look to consolidate your money to an active super account, if you have one. The ATO will process this transfer within 28 days of identifying your active super account and will write to you to confirm your super balance and the fund it has been paid to.
If you do not have another active super fund account you will need to contact the ATO.
1 Fees include administration fee, investment fee and indirect cost ratio.
2 Essential Super doesn’t currently charge exit fees.
Colonial First State Investments Limited ABN 98 002 348 352, AFSL 232468 (CFS) is the issuer of interests in Commonwealth Essential Super ABN 56 601 925 435 (Essential Super) and is a wholly owned but non-guaranteed subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124 (Bank). This document may include general financial product advice but does not consider your individual objectives, financial circumstances or needs. You should read the Product Disclosure Statement (PDS) and the Reference Guide for Essential Super carefully and consider whether the information is appropriate for you before making any decision regarding this product. Download the PDS and Reference Guide, or call us on 13 4074 for a copy. The Bank and its subsidiaries do not guarantee the performance of Essential Super and an investment in this product is subject to risk, loss of income and capital invested. An investment in Essential Super is via a superannuation trust and is therefore not an investment in, deposit with or other liability of the Bank or its subsidiaries. Where we mention ‘we’, ‘us’ or ‘our’, we mean CFS.