The Corporate Super Specialist Alliance (CSSA) is calling on the Government to consider allowing corporate super specialists providing insurance services to employer groups to charge an insurance service fee.
The request was put to the Government in the CSSA’s submission responding to the Exposure Draft Superannuation Legislation Amendment (MySuper Care Provision) Bill 2011.
“Corporate super specialists currently provide a range of highly valued insurance services to members of corporate super funds, including things like negotiating reduced premiums and better features, ensuring members are not subject to automatic acceptance levels and helping them navigate the maze of paperwork that accompanies claims,” said CSSA President, Douglas Latto.
“While the CSSA recognises that it is inappropriate for commissions to be included in a premium when no service is being delivered, if corporate super specialists cannot be effectively remunerated, members of corporate super funds would ultimately lose their services.”
Under the Future of Financial Advice (FoFA), Tranche 2, commissions on insurance within superannuation will only be allowable on choice funds and products; group insurance is excluded.
“We suggest that an explicit insurance service fee, which defaults to zero, be charged to all members at an agreed percentage with the consent of the employer,” Mr Latto said. “This is specifically relevant when a tailored default insurance strategy is selected by the employer – rather than the standard default strategy.”
Mr Latto said the insurance service fee could operate within group insurance in the same way that asset-based fees operate within investment and superannuation. “This should ensure that only those receiving insurance services are paying the fee,” he said.
Mr Latto argued that ultimately group insurance is a better solution for members, offering lower costs and more tailored features than a series of individual contracts. “It makes no sense that payment for providing services associated with insurance to members can only be made from the least efficient solution,” he said.
Corporate Super Specialist Alliance (CSSA)
The CSSA represents corporate superannuation specialist advisory businesses. CSSA members provide financial advisory services to thousands of corporate superannuation funds across metropolitan and regional Australia and play an essential role in managing Australia’s large and growing superannuation savings pool. CSSA members work with Australian companies and their workers to provide them with improved life insurance and superannuation outcomes via their corporate superannuation plans. CSSA members provide a broad range of services to corporate super plans at four levels – the employer level; the policy committee (representative body) level; the individual super fund member level and to super fund members collectively. These services help employers and policy committees ensure members are getting competitive benefits and features, at a competitive price, and that members have access to general advice and information to help them improve their decisions about their retirement savings and life insurance choices.
Julie Bennett, 64 Media