How Recent Changes to Super Legislation Affect You

How Recent Changes to Super Legislation Affect You. Australian Government new laws affecting millions of Australians under a new scheme called “Protecting Your Super” with Mark Redman Regional Manager for Prime Super and HorizonOne Recruitment.

On July 1 2019, the federal government introduced new laws affecting millions of Australians under a new scheme called “Protecting Your Super”.

The changes aim to protect superannuation savings from fees and insurance costs, but could have significant consequences for those who don’t understand how they work or ignore them altogether.

To get the low down on what these changes mean, and what actions you should take (if any), I chatted with Mark Redman from Prime Super.

So Mark, what are the “Protecting Your Super” changes in a nutshell?

We’ve seen pretty significant changes to superannuation starting on July 1 of this year. The ethos behind them is the government is bringing in reforms and measures to protect Australians’ superannuation balances from erosion by unnecessary fees.

The changes are:

  1. Most funds previously charged an exit fee to roll your super into another fund. From July 1, they aren’t allowed to do this.
  2. A limit on the fees that super funds can charge if you have a low balance in your account. Basically, if the amount in your account is less than $6,000 then the fees can’t be more than 3% per annum.
  3. If your account has been inactive for more than 16 months – that is, you haven’t put any money into it – and it has less than $6000 in it, the balance will be transferred to the ATO and the account will be closed.

If your balance is transferred to the ATO they will attempt to reunite it with an active account. If not, they may hold it until you claim it from them.

Are there any concerns about the changes?

A significant concern is the cancellation of insurance.

When you become a member of a superfund you get default insurance – usually total and permanent disability cover (TPD) and life insurance. If you only have 1 account that has less than $6,000 and it hasn’t been used in 16 months, that account may lose insurance cover and automatically be closed.

This could particularly affect young people, individuals on parental leave, and those working or holidaying overseas who aren’t aware of the changes. They may believe they are covered, and then discover in the worst circumstances that they aren’t.

Data tells us the average Australian has 3 superannuation accounts. So it’s worth investigating where your money is, merging it into a single account and ensuring that it has adequate insurance.

Do you believe these changes are a step in the right direction for superfunds?

Well Prime Super has never charged our clients an exit fee – we don’t believe in charging if you want to go elsewhere.

We’re also the one of the only funds that we know of that doesn’t charge any administration fees for accounts with a balance of less than $6,000 anyway. If we can’t do a good enough job getting your super balance above $6,000 then we shouldn’t be charging you any fees! If your balance does go above $6,000 the fees are really competitive and administration fees are capped when your balance is at $100,000 so you’re not penalised for having a meaningful balance.

It may affect other superfunds, but the main issue is how it affects people – particularly young people and those who may be caught without insurance.

Statistics show that those who take a vested interest in their superannuation at a young age improve their final retirement amount by as much as a few hundred thousand dollars. This is a significant difference and worth a thought!

What tips do you have to help people who are affected by the changes?

We’ve been working very hard to communicate these changes to our members, so if your superfund has been sending you information, try to make time to read it.

With that in mind, my tips would be:

  1. Engage with your superfund, read the correspondence we send you and let us know if something changes, like moving house.
  2. Get your life admin in order – know where your super is, and merge any inactive accounts that you’re not using.
  3. Take an active interest in your superannuation fund by reviewing your investment options and insurance against your life stage and risk profile.
  4. Ask for help – if you’re not sure what is the best option for you, give your super fund a call or talk with a Financial Adviser.

Superannuation is likely to be most people’s second biggest asset outside the family home. And the sooner you become interested in it, the more meaningful your balance could be – which can make a huge difference to the outcome for your lifetime of work.


Mark Redman is a Regional Manager for Prime Super Pty Ltd (ABN 81 067 241 016 AFSL No. 219723 RSE Licence No. L0000277) who are Trustees of Prime Super (ABN 60 562 335 823; RN 1000276).

This article contains general information only and does not take account of your personal circumstances. You should obtain personal advice where appropriate.