APRA has opened public consultation for revisions to its prudential standard around insurance in superannuation, angling for changes such as a maximum level of cover to not erode retirement income and independent verification showing arrangements are in beneficiaries’ best interests.
The proposed changes are aimed at improving superannuation member outcomes by helping trustees select the most appropriate policies for their members and monitor their ongoing relationships with insurers.
APRA’s decision to update Prudential Standard SPS 250 Insurance in Superannuation (SPS 250), comes after its post-implementation review of the superannuation prudential framework in April.
The review had recommended enhancements to the regulator’s requirements and guidance on the strategy, design and selection of insurers, with impact on members in mind.
The proposed revisions, as outlined in a letter to industry yesterday, required:
• A process that enables beneficiaries to easily opt out of insurance cover;
• That the level and type of insurance cover not inappropriately erode the retirement income of beneficiaries;
• That any status attributed to a beneficiary in connection with the provision of insurance is fair and reasonable
• Independent certification that insurance arrangements are in the best interests of beneficiaries
The last two of APRA’s changes have also responded two of the recommendations from the royal commission (royal commission recommendation 4.15 and 4.14 respectively).
The consultation closes on 3 February and APRA will finalise the prudential standard by mid-2020. The revised standard will come into effect on 1 January 2021.
Insights from the consultation will also form the basis of a revised prudential practice guide SPG 250 insurance in superannuation, which APRA will consult on next year.
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
You can contact her on [email protected].
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