Members of defined contribution (DC) plans in Australia who are younger than age 25 or have low-balance accounts of less than A$6,000 will have to opt in for insurance protection under the Treasury Laws Amendment (Putting Members' Interests First) Bill 2019, which received Royal Assent on 2 October.
Opt-in requirements. Trustees can no longer require certain eligible members to opt out if they don’t want insurance coverage for a MySuper product or a Choice product. Under the law:
Default insurance. Default insurance coverage will generally be required for a MySuper product or permitted for a Choice product for members who meet either of these conditions:
Dangerous occupation exception. Recent changes to the legislation added a dangerous occupation exception that allows trustees to provide insurance on an opt-out basis. The exception applies only to members employed as emergency services workers or in an occupation listed in the election form and certified by an actuary to be in the riskiest 20% of occupations. The fund trustee must make a written election to the Australian Prudential Regulation Authority, and a number of other conditions apply.
Other provisions. The law doesn’t clarify how frequently a trustee must check members’ balances to determine when they trigger the A$6,000 threshold. A conditional exclusion applies for insurance fully purchased by the member’s employer on top of Superannuation Guarantee contributions.