Superannuation funds introduce new fees for insurance policyholders

Superannuation funds Spirit Super and TWUSUPER have recently announced the introduction of new fees for their policyholders. These changes, while intended to address various financial considerations, may affect the overall costs of maintaining insurance within these funds.

Spirit Super's Insurance Administration Fee:

Starting at the end of this month, Spirit Super is implementing an insurance administration fee that will see members' costs rise. This new fee is calculated at 3% of the premiums payable. While insurance premiums and coverage levels will remain unchanged, members will begin paying this administration fee on top of their existing insurance costs. Spirit Super explained that the fee is necessary to cover administrative expenses related to managing insurance accounts and processing claims. This fee will be included as part of the monthly insurance fee deducted from member accounts, ensuring transparency in cost structures. Importantly, it won't impact policy coverage or premiums, as Spirit Super recently negotiated lower insurance premiums with MetLife, resulting in savings for its members.

TWUSUPER's Gross Premiums Fee:

In July 2022, TWUSUPER took a similar approach by introducing an administration fee equivalent to 3% of gross premiums. This fee aimed to address concerns of cross-subsidisation within the fund. By levying this fee on policyholders with insurance coverage, TWUSUPER sought to create a more equitable cost-sharing mechanism among members, regardless of their insurance status. This move aimed to balance the maintenance of insurance offerings while sustaining competitiveness in the superannuation sector.

Conclusion:

The recent actions by Spirit Super and TWUSUPER reflect the evolving landscape of superannuation funds. These changes in fee structures are designed to address financial challenges while ensuring continued access to insurance coverage for policyholders. While policyholders may be concerned about increased costs, both funds remain committed to delivering valuable insurance services and ensuring financial sustainability. These fee adjustments are part of their dedication to securing the long-term viability of their funds while effectively meeting the diverse needs of their members.