New insurance guidelines for My Super
A draft version of the latest guidelines for MySuper legislation was released this week. The guidelines detail recommendations for a number of aspects of insurance and intra-fund advice, including clarification of commissions and payments for advisors, particularly in the field of group insurance.
In the area of insurance, according to the new guidelines, MySuper trustees now have to offer a minimum level of Life and Total & Permanent Disability cover. Insurance policies offered must still meet existing Superannuation Industry Supervision regulations and it is up to the trustees to decide an appropriate minimum level of insurance cover for their clients.
The cost of financial advice to employers on group insurance policies will no longer be able to be recovered through a charge to employees through the fund. Superannuation funds won’t be able to pay premiums on insurance policies which include embedded commissions for advisors. This is in a bid to help lower overall fees for investors in superannuation funds.
The new guidelines have also introduced restrictions on the payment for one-on-one financial advice across all members of a fund. When the nature of the advice is complex it will no longer be permissible for the fund to charge an admin fee to cover the costs. Under the new regulations, the individual member will be responsible for the payment of the cost of financial advice provided specifically to them.
Other requirements include the need for superannuation funds to publish a dashboard showing return on investment, average fees charged and risk levels for all their products. In essence, the new regulations are intended to reduce overall fees for customers and enhance the quality of the services provided.