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Putting Members' Interests First (PMIF) legislation

The Australian government recently passed new legislation, the Putting Members' Interest First legislation, which takes effect on 1 April 2020. If you’re a member who recently joined us, currently have a low balance, or are under the age of 25, you may be impacted by these changes.

What is the Putting Members' Interests first legislation (PMIF)?

The PMIF legislation was introduced by the government to help young people and those with low account balances by removing insurance cover which can erode or even prevent super balances from growing. This legislation is in addition to the Protecting Your Super Package (PYSP) legislation introduced by the government on the 1 July 2019, designed to protect member’s super savings from unnecessary fees and insurance premiums.
 
By law, most superannuation funds are required to provide insurance cover to their members to ensure that they’re covered in the event of serious injury or death – events of which you or your family may not be able to afford out of pocket.

Who is impacted by the changes?

On 1 April 2020 the legislation will force funds to cancel insurance cover for members with balances of less than $6,000, unless you communicate to them in writing that you wish to keep your insurance cover.
 

Example 1 – Anna (age 22)

Anna is 22 years old, has $2,000 in her super account, and has insurance cover. Sunsuper lets her know that unless she grows her balance to above $6,000 or lets them know she wants to keep her insurance cover, they will be required by law to cancel her cover on 1 April 2020.

Anna contacts her fund in writing to state that she wishes to keep her insurance cover prior to 1 April 2020, and her super fund then makes note of this. On 1 April 2020, Anna’s insurance cover would not be cancelled as she has let her fund know she wanted to keep her cover.

 

Example 2 – Nic (age 35)

Nic is 35 years old, and was communicated to prior to 1 April 2020 that his insurance cover would stop if he didn’t grow his balance above $6,000 or let Sunsuper know he wants to keep his cover.

On 1 April 2020, Nic’s balance has grown to $4,500, but he has not let Sunsuper know he wanted to keep his insurance cover. Under the new rules, Nic’s insurance cover would be cancelled as he didn’t have a balance of more than $6,000 and didn’t communicate he wanted to keep his cover in writing to Sunsuper.



 

In addition to this, from 1 April 2020 any new members joining Sunsuper or waiting to have their standard insurance cover commence won’t have their cover start until they’re at least over the age of 25 and have a balance of at least $6,000 in their super account (subject to other rules of the super fund regarding when insurance cover is provided).

 

Example 3 – Melvin (age 33)

Melvin is 33, and his employer has opened a Sunsuper account for him by making an Superannuation Guarantee (SG) contribution of $300 on 3 April 2020.

Although Melvin is over 25 and his employer has made an SG contribution into his account, Sunsuper would not immediately provide him with insurance cover until his balance is over $6,000.

On 15 April, Melvin chooses to consolidate his other super into his Sunsuper account, and rolls in $6,000. Melvin’s insurance cover would now commence on 15 April (the date the money was received) as his balance after receiving his rollover would now be over $6,000.

 

Example 4 – Michelle (age 24)

Michelle is 24, and her employer has opened a Sunsuper account for her by making an SG contribution of $800 on the 28 April. On 30 April, Michelle then consolidates all her other super accounts into Sunsuper, and rolls in $8,000.

Although Michelle’s balance is now above $6,000 as at 30 April, her fund would not immediately provide her with insurance cover until she turns 25 and meets any other additional requirements in her Insurance guide.


Are there any exceptions to these new rules?

You may be automatically exempt from these changes depending on whether you’re a current member with active insurance cover, are waiting for insurance cover to start, or are yet to join Sunsuper.

I have active insurance cover on my Sunsuper account prior to 1 April 2020

Sunsuper members with active insurance cover identified prior to 1 April 2020 as having a balance of less than $6,000 will generally have their insurance cover cancelled unless they:

  • are a Defined Benefit member;
  • have an employer who pays your insurance cover in full;
  • have made an active decision about your insurance cover (ie. been underwritten for existing insurance cover, have applied to increase/decrease cover); or
  • have previously communicated to Sunsuper in writing that you would like to keep insurance cover.
My insurance cover is yet to become active, or cover is yet to automatically restart.

If you’re a Sunsuper member and your insurance cover is yet to start or restart if your cover had previously been ceased, your future cover may be impacted depending on when your new cover starts.

If your cover starts:

Prior to 1 April 2020 - You’ll be subject to the same rules as a member who has active insurance cover on their account.

From 1 April 2020 - New rules will be in effect where you’ll be required to be over 25 and have a balance of at least $6,000 before standard cover commences (subject to the rules of the fund).

I have joined Sunsuper from 1 April 2020

If you’re a new member who joins Sunsuper after 1 April 2020, new rules will be in effect where you’ll be required to be over 25 and have a balance of at least $6,000 before standard cover commences (subject to the rules of the fund), unless you:

  • are a Defined Benefit member;
  • have an employer who pays your insurance cover in full; or
  • have previously communicated to Sunsuper that you’d like to have your insurance cover start earlier (subject to the rules of the fund).

What is Sunsuper doing to communicate these changes to members?

We’ll be contacting members between mid-November to early December to let them know if they’re impacted by the changes and ask them to make a choice about their insurance cover. We’ll continue to update members until 1 April 2020 about this change to ensure they have plenty of opportunity to consider if insurance cover is right for them.

Is insurance cover right for me?

While no-one expects the worst to happen, having the right insurance cover can help secure your lifestyle in the event a serious injury, or could financially assist your family and loved ones should you unexpectedly pass away. You also benefit from having premiums automatically deducted from your Sunsuper account balance instead of your take home pay. 
 
Before making a decision, you should consider the Insurance Guide for more information on insurance cover and your own personal situation to determine if having insurance cover in Sunsuper is right for you. Super is your future money, so it makes sense that you don’t pay for insurance you don’t need, as the premiums will reduce the amount of money that you have in retirement.  
 
If you need help to determine if insurance cover is right for you, you should consider speaking with your adviser, or contact Sunsuper to get the advice you need. Our qualified financial adviserscan give you advice about your Sunsuper account at no additional cost, quickly over the phone. For more comprehensive advice, we may refer you to an accredited external financial adviser.2 Advice of this nature may incur a fee.
 
You can also refer to ASIC’s MoneySmart website at for additional information about insurance through your super.

I am ready to make a choice about my cover, what are my options?

If you have considered your insurance needs and are ready to make a choice about your cover, your options are below.
 

Keep your insurance cover

If you want to keep your insurance cover, you can let us know in the following ways:
  • By navigating to the ‘Keep your insurance cover’ section in Member Online (you’ll find this in the Insurance sub-menu); or
Unfortunately, requests to keep insurance cover can’t be taken over the phone as we are required by law to have your request in writing.

Once we’ve recorded your request, we’ll confirm in writing that your insurance cover will continue.

Cancel your insurance cover

If you believe that insurance cover in your account is not right for you, you can choose to cancel your cover in the following ways:
  • By navigating to the ‘Reduce or cancel your insurance cover’ section in Member Online (you’ll find this in the Insurance sub-menu);
If you wish to obtain cover again in the future, evidence of health satisfactory to the insurer will be required before cover can restart from the date accepted by the insurer.

Once we’ve recorded your request to cancel cover, we’ll confirm when this occurs to you in writing.
Remember, you can apply to increase or reduce your insurance cover at any time. Refer to your Insurance guide for more information.
 

Sunsuper employees provide advice as representatives of Sunsuper Financial Services Pty Ltd (ABN 50 087 154 818 AFSL No. 227867) (SFS), wholly owned by the Sunsuper Superannuation Fund.
Sunsuper has established a panel of accredited external financial advisers who are not employees of Sunsuper. Sunsuper is not responsible for the advice provided by these advisers and does not receive or pay any referral fees. These advisers will explain to you how their advice fees are determined.