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Factsheet - Superannuation complaints about PMIF and insurance cover

This fact sheet explains how AFCA considers complaints about trustees not providing or cancelling insurance cover in a member’s superannuation account because of the Putting Members’ Interests First legislation (PMIF).

Why was the PMIF legislation introduced?

The purpose of the PMIF legislation is to protect superannuation accounts from being reduced by unnecessary insurance costs (premiums). The legislation applies to both Choice and MySuper accounts.

The relevant legislation is set out in Sections 68AAB and 68AAC of the Superannuation Industry (Supervision) Act 1994 Cth (SIS). These changes were introduced by the Treasury Laws Amendment (Putting Members’ Interests First) Act 2019 (Cth).

How does the PMIF legislation affect superannuation insurance cover?

From 1 April 2020, a superannuation fund trustee (trustee) must not provide insurance cover, if the member:

  • has a ‘low balance account’; and/or
  • is a new fund member and is under 25.

These provisions apply unless the member has elected to take out or keep insurance cover. This is often referred to as ‘opting in’.

There are some exceptions under the law, including a specific exception for insured members working in dangerous occupations.

Are there other circumstances where insurance cover can be cancelled?

Insurance cover held through a superannuation fund may be cancelled in other circumstances, including if:

  • the member has an ‘inactive account’ under the Protecting Your Super (PYS) legislation; or
  • there is not enough money in the member’s account to pay premiums; or
  • the policy terms or fund’s trust deed require the trustee or the insurer to cancel the member’s insurance cover.

See the AFCA fact sheet Superannuation complaints about PYS and insurance cover for more information.

Low balance accounts

What is a low balance account?

A low balance account is:

  • an account with a balance of less than $6,000; and
  • on and after 1 November 2019, the account balance has never been $6,000 or more.

What if an account was a low balance account before 1 April 2020?

Special transitional rules applied for members whose account had a low balance, up to 1 April 2020. A trustee had to provide them with transitional notices as explained below.

What is a valid election to ‘opt in’ to insurance cover?

A trustee must ensure that a member with a low balance account, or who is under 25, can ‘opt in’ to take out or keep insurance cover. There are limited exceptions to this requirement.

An ‘opt-in’ notice from a member must be in writing and must be received by the trustee to be effective. Once a valid opt in notice is in place, it stays in effect until the member tells the trustee they no longer want to have insurance cover.

In certain circumstances, the trustee will accept that a member has already opted in, for example, if they have already opted in under PYS legislation.

If you opt in, you should follow up by checking your account statement online to ensure you have insurance cover. If you have any questions or concerns, contact your fund immediately. If you decide you no longer want insurance cover (or a type of cover) at any time, you will need to tell your superannuation fund so that the trustee can make the necessary changes.

How is the ‘opt in’ information given?

For information issued on or after 1 April 2020 (ongoing arrangements), the legislation does not prescribe how the trustee must give the information about PMIF and how a member can opt in to have insurance cover.

The trustee can rely on notice requirements under the fund’s trust deed and/or as set out in the trustee’s disclosure material. It can also rely on law about electronic notices, if applicable. For example, the fund’s trust deed may say that all notices, or certain types of notices, must be issued by mail. However, trustees generally have power to issue notices in different ways.

You should make sure your superannuation fund always has current contact details for you, including an up-to-date postal and email address. Otherwise, you may not receive important information issued by the trustee.

Confirmation that insurance cover has been cancelled

AFCA generally expects trustees to tell a member if their insurance cover has been cancelled under PMIF legislation.

Dangerous occupations

What if a member works in a dangerous occupation?

Some members are subject to a ‘dangerous occupation’ exception. This means the trustee will provide them with insurance cover even where they otherwise would not have done so because of the PMIF legislation.

Where that exception applies, the trustee must write to affected members explaining this, setting out the cost of premiums, and explaining how the member can opt out of having the insurance cover.

Is the trustee required by law to give a notice or warning before cover is cancelled?

No. Although trustees do not have to give prior notice that insurance is about to be cancelled (under PMIF legislation), in AFCA’s experience most trustees do take this step.

Transitional notices

When was a transitional low balance notice required to be issued?

For transitional arrangements, where a member was identified before 1 April 2020 as having a low-balance account, the trustee was required to give the member a transitional low balance notice.

The information for a transitional low balance notice is set out in the Treasury Laws Amendment (Putting Members’ Interests First) Act 2019 Cth.

On 1 November 2019, trustees had to identify all members with an account balance less than $6000 and then notify them in writing on or before 1 December 2019, explaining:

  • the trustee would cancel the insurance cover on 1 April 2020 if the insured member’s account was a ‘low balance account’ at that date, unless they made an election to opt in to keep their cover; and
  • how the member could opt in.

For a member who started an account after 1 November 2019 and before 1 April 2020, the trustee had to notify that member in writing, explaining:

  • the trustee would cancel (or not provide) the insurance cover on 1 April 2020 if the insured member’s account was a ‘low balance account’, unless the member made an election to ‘opt in’ to take out or keep their cover; and
  • how the member could opt in.

Relevant information

AFCA will consider if the trustee’s decision to cancel (or not provide) insurance cover was fair and reasonable in all the circumstances, in its operation in relation to the complainant.

What is AFCA’s approach to this type of complaint?

We will consider if the insurance cover was cancelled correctly by reviewing:

  • the superannuation fund’s trust deed and the insurance policy (group or individual retail policy)
  • relevant disclosure material; and
  • the applicable law.

What information does AFCA need?

From your superannuation trustee:

  • if the notice the trustee sent you explaining PMIF was issued correctly
  • evidence of valid despatch (postal or electronic) of the trustee’s communication
  • information about your communication preferences, online access, and last nominated address.

See AFCA's Approach to proof of despatch for more information about the provision of documents, including via email.

We may also ask the trustee for:

  • evidence you opted to take out or keep insurance cover (if applicable)
  • information about any applicable ‘dangerous occupation’ exception
  • details of any cover reinstatement options the trustee had arranged, or which the fund’s policy allows
  • information about how the trustee applied PMIF legislation to your account, particularly if you say the trustee’s conduct was misleading or deceptive.

What outcomes are available for superannuation complaints about insurance cover?

In a superannuation complaint about a trustee cancelling (or not providing) insurance cover under PMIF legislation, AFCA will consider if the trustee’s decision or conduct was fair and reasonable in all the circumstances. cannot, by law, issue a determination that would require a trustee to act contrary to its governing rules, an insurance policy, or the law.

AFCA will generally consider a trustee to have acted reasonably if it can show:

  • the complainant was under age 25 and/or the complainant’s account was under $6,000 at the relevant time;
  • the trustee gave the required notice, including information about how to ‘opt in’ to insurance cover by a permitted method; and
  • the trustee did not receive a valid ‘opt in’ notice from the member.

If we are satisfied the trustee didn’t meet the requirements of the PMIF legislation when it cancelled or didn’t provide insurance cover, we may go on to consider if you (the member) have suffered a loss as a result and should receive compensation from the trustee.

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