Yahoo Finance ‘I’m annoyed’: $300 super fee stumps Aussies
Most Australians over the age of 25 have some form of life insurance through their superannuation, but one third would struggle to explain what their insurance is covering.
Superannuation members, who pay an average $300 a year on insurance, have admitted to feeling “confused, overwhelmed or uncertain” after attempting to find out more about their insurance within their super, a new report commissioned by the corporate regulator ASIC has found.
Also read: The Aussies $115,000 worse off in retirement
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The research found that obtaining information about insurance, or making changes to their insurance, presented “several potential hurdles to many members”, with a third of members finding their insurance itself complex and difficult.
“Most members expected this to be a simple self-service process, but found that was not the case. Many wanted more than factual information,” ASIC said.
“Some discovered information they did not understand or did not know how to respond to. This often caused them to delay in engaging further with their fund on insurance after their initial interaction.”
The report, by Susan Bell research, found that while the majority of people who tried to find out more about insurance within their super were satisfied by their experience, around a third felt disempowered.
For some members, that was because premiums were deducted without them consciously taking note.
“Some felt disempowered by an onerous process, made difficult by the lack of online resources that members wanted,” the researchers said.
“On the other hand, some members had tried unsuccessfully to have quite complex questions answered through chat, the app or the website only, because the member did not want to contact the fund by phone. For some, the encounter felt “pushy” or with a sales focus.”
Australians were contacting their funds to find out what they were paying for, if their life and income insurance policies were enough and how to change or cancel their policies.
One member who is a casual worker said they left their experience at a “bit of a standstill” as they were still confused about the long-term effects of their cover and whether they were covered in that moment.
Another said she found it “a bit annoying”, as she didn’t know that she was even paying for the insurance and was already paying for life insurance directly.
“So it was a bit annoying because then I thought well, obviously before I cancelled them, because they get more and more expensive as you get older, and I need to do my research and decide whether it's worth holding onto them. And that is, as I said, time consuming.”
One member added that she felt the super fund should have a bigger responsibility in communicating the policy with their members.
“I'm annoyed about [that], to be honest. I think it's the fact that I had to ring them. When I'm paying them ... This is how I see it and they may see it differently,” that member said.
“I'm contributing money towards their managing my super fund but I think I'm a bit disappointed at the fact that it's left up to me to contact them to check that everything still suits me.”
Moves to improve insurance in super
Unnecessary superannuation fees cost Australians as much as $300,000 by retirement, with fees costing Australians $30 billion collectively every year.
However, changes introduced on 1 July this year aim to cull some of those fees.
Superannuation funds now follow workers from job to job, meaning workers don’t accidentally keep opening new funds at every new job they move to.
Under legislation passed in 2019, Australians younger than 25 also need to opt in to insurance in their superannuation, while automatic life insurance was also stripped from accounts with less than $6,000 in a bid to save young Aussies from paying for insurance they likely wouldn’t need.
By retirement, young Australians who opted out of super would have an extra $40,000 in their funds due to compound interest.
However, several funds introduced arrangements that keep insurance mandatory for workers in high-risk jobs.
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