This week, the Australian Securities and Investments Commission (ASIC) addressed the importance of superannuation trustees putting members’ interests first.
One of the key principles in the proposed Protecting Your Superannuation Package (PYSP) reforms is improved communication between funds and their members.
“The PYSP communications reviewed by ASIC were not always balanced in providing members with all available options to them, including the reason why ceasing insurance might be appropriate,” ASIC Commissioner Danielle Press said.
According to the corporate regulator, this initiative is the result of the ‘Putting Members’ Interests First (PMIF) reforms due to commence on 1 December, which requires firms to write to consumers with less than $6,000 in their accounts, advising them their insurance cover may cease on 1 April 2020, unless they have chosen to opt-in before this time.
ASIC listed their two major expectations:
providing balanced and factual communications that include appropriate context about the reforms, and
tailoring communications to the needs of their members.
“ASIC expects trustees to follow ASIC’s guidance, based on its initial review of the PYSP communications, in designing their communications from now on. Communication with members about important matters, such as their insurance, should not be dismissed as a ‘mere exercise in compliance.’ Trustees need to act to help their members understand what the reform means for the member,” Press said.
What AISC highlights as its key deadlines:
Trustees must identify members with balances of less than $6,000 on 1 November 2019
By 1 December 2019, trustees must give notice to impacted members with balances less than $6,000, indicating that if their balance remains less than $6,000, their insurance cover will cease on 1 April 2020 unless there is an election in writing to maintain insurance, and
By 1 April 2020, insurance is not to be provided to members who have an account balance less than $6,000 or for members under-25 years old, unless the member has elected in writing to take out or maintain insurance.