Adviser update on PYS and LifeSolutions Super

Adviser update on PYS and LifeSolutions Super

A lot has been written about the new Protecting Your Super (PYS) package which was passed as law in April. With the first mandated member communications on these being required to be sent by the 1 May, ClearView had to accept this legislation at face value and issued inactive insurance notices to members whose account had been inactive for six months or more.

Since then, we have been able to revise our position on how PYS applies for LifeSolutions Super. Importantly, ClearView will not issue any further inactive insurance notices to LifeSolutions Super members. We will inform members of this update in their 2019 Annual Statement.

Below is a full update on the impact of each of the three parts of PYS for LifeSolutions Super and LifeSolutions Super Rollover.

Schedule 1 - Low balance fees cap

We are required to add additional disclosure for the LifeSolutions Super Rollover product regarding the maximum fees (of 3%) that may be charged for low balance accounts.  Importantly, all fees and charges under this product fall below this maximum. Since this change is not materially adverse, it will be communicated by way of a website update from 1 July 2019, and will also be communicated on exit statements. The LifeSolutions Super risk-only product does not charge any fees, so this part does not apply.

Schedule 2 - Inactive insurance

LifeSolutions Super policies cannot, as a general rule, continue after a 12-month term unless the member makes a contribution or a rollover to renew the policy for another year. Even after a grace period, the yearly renewable construct doesn’t allow more than 14 months of inactivity with the insurance continuing.  As a result, we will not be issuing further inactive insurance notices to LifeSolutions Super members.

Schedule 3 - Inactive low balance

Some members paying for their LifeSolutions Super policy by rollover have paid more than their yearly premium using the LifeSolutions Super Rollover facility. These accounts are caught up in the inactive low balance part of PYS. PYS will provide an additional ability for us to identify a member’s intent, with these excess amounts transferred to the ATO if these funds are not otherwise accounted for prior to the end of 16 month period. At this stage there are no LifeSolutions Super Rollover members that this will apply to.

For a recap on how PYS applies to our super products (WealthFoundations, WealthSolutions and Traditional Wealth), see our recent Wealth Update.