Treasury Laws Amendment (Protecting Your Superannuation Package) Act 2019 (16 of 2019)

Schedule 2   Insurance for superannuation members

Part 1   Amendments

Superannuation Industry (Supervision) Act 1993

1   After section 68

Insert:

68AAA Benefits provided by taking out insurance - inactive accounts

(1) Each trustee of a regulated superannuation fund must ensure that a benefit is not provided by the fund to, or in respect of, a member of the fund under a choice product or MySuper product held by the member by taking out or maintaining insurance if:

(a) the member's account is inactive in relation to that product for a continuous period of 16 months; and

(b) the member has not elected under subsection (2) that the benefit will be provided to, or in respect of, the member under the product by taking out or maintaining insurance, even if the member's account is inactive in relation to that product for a continuous period of 16 months.

Note: This section does not apply in relation to regulated superannuation funds with fewer than 5 members (see section 68AAD).

(2) Each trustee of the regulated superannuation fund must ensure that each member of the fund who holds a choice product or MySuper product offered by the fund may elect, in writing, that a benefit specified in the election is to be provided to, or in respect of, the member under the product by taking out or maintaining insurance, even if the member's account is inactive in relation to that product for a continuous period of 16 months.

(3) For the purposes of this section, a member of a regulated superannuation fund has an account that is inactive in relation to a choice product or MySuper product for a period if the trustee, or trustees of the fund, have not received an amount in respect of the member that relates to that product during that period.

(4) The prohibition in subsection (1) ceases to apply to benefits provided to, or in respect of, a member of the fund under a choice product or MySuper product held by the member if the trustee, or trustees of the fund, receive an amount in respect of the member that relates to that product after the account has been inactive in relation to the product for 16 months.

(5) However, the prohibition in subsection (1) applies again if the member's account is again inactive in relation to the product for a period of 16 months.

(6) This section does not apply to:

(a) a defined benefit member; or

(b) an ADF Super member (within the meaning of the Australian Defence Force Superannuation Act 2015); or

(c) a person who would be an ADF Super member apart from the fact that the regulated superannuation fund is or was, for the purposes of Part 3A of the Superannuation Guarantee (Administration) Act 1992, a chosen fund for contributions for the person's superannuation by the Commonwealth; or

(d) a member to whom the employer-sponsor contribution exception applies (see section 68AAE).

(7) Nothing in this section affects a right of a member of a regulated superannuation fund if:

(a) the right relates to insurance cover; and

(b) in compliance with this section, an insurance premium in relation to the member for that insurance cover ceases to be paid; and

(c) the right exists because of insurance premiums paid in relation to the member before insurance premiums cease to be paid as mentioned in paragraph (b).

(8) Nothing in this section affects a right of a member of a regulated superannuation fund if:

(a) the right is a right to insurance cover for a fixed term, subject only to the payment of insurance premiums; and

(b) that fixed term begins before the time at which a trustee of the fund is required under subsection (1) to ensure that a benefit is not provided to, or in respect of, the member under a choice product or MySuper product held by the member by taking out or maintaining insurance.

68AAD Section 68AAA does not apply to funds with fewer than 5 members

Section 68AAA does not apply in relation to regulated superannuation funds with fewer than 5 members.

68AAE Employer-sponsor contribution exception

(1) The employer-sponsor contribution exception applies for a quarter to a member of regulated superannuation fund to, or in respect of, whom a benefit is provided by the fund under a choice product or MySuper product held by the member by taking out or maintaining insurance if:

(a) an employer-sponsor notifies the trustee of the fund in writing that the employer-sponsor will pay insurance fees relating to the benefit for the member; and

(b) the member is:

(i) an employee of the employer-sponsor, or an associate of the employer-sponsor; or

(ii) the relative or dependant of such an employee; and

(c) the quarter ends after the employer-sponsor notifies the trustee under paragraph (a); and

(d) the amount the employer-sponsor contributes to the fund for the quarter exceeds the amount that the employer-sponsor would need to contribute to avoid an individual superannuation guarantee shortfall for the member for the quarter; and

(e) that excess is equal to or greater than the insurance fees relating to the benefit for the quarter.

(2) In this section:

quarter means a period of 3 months beginning on 1 January, 1 April, 1 July or 1 October.