Rest Super has been accused of breaching trustee duties ahead of a new class action lawsuit from Shine Lawyers.
The $80 billion fund is facing claims that members may have had income protection insurance premiums wrongfully deducted from their super accounts.
“This class action alleges that between December 2008 and June 2019, Rest Superannuation signed up new members to income protection insurance by default, without the member actively choosing to sign up to the policy,” explained Hadi Boustani, Shine Lawyers’ practice leader.
“We also claim that when members did not make any contribution to their Rest account for 13 continuous months or more, the default income protection insurance policy did not provide the member with any coverage and when members held multiple income protection insurance policies at the same time, the Rest income protection policy provided little to no coverage.”
The law firm has described these actions as “money down the drain” for members who allegedly paid the premium for no benefit.
“As a result, we’re seeking compensation for insurance premiums which we allege were unfairly deducted, as well as investment returns and administration costs,” Mr Boustani said.
It believes that up to 500,000 Rest members may have been affected.
The class action is being funded by Woodsford, a leading litigation funder.
“Everyday Australians trust their superannuation funds to look after their hard-earned dollars which they have invested for their retirement. Having sufficient superannuation to fund retirement is so important,” said Clare Owen, director and head of origination, Woodsford Australia.
“Woodsford is pleased to be supporting this action to assist those everyday Australians in recouping losses to their superannuation which has been unfairly eroded.”
The class action was listed for a case management hearing on Friday, 16 February 2024 in the Federal Court.
Rest has until 28 March to file its defence.
In a statement to InvestorDaily, a Rest spokesperson confirmed the super fund intends to defend the action.
“As a profit-to-member fund, Rest has at all times focused on the best financial interests of members. Rest’s group insurance cover is and has always been designed to meet the needs of our members,” they said.
“Offering default income protection cover to Rest members is a highly valuable benefit and supports members who are unable to work due to illness or injury. Many Rest members work part time and would not be able to obtain income protection cover by any other means or at a reasonable cost.”
In the last financial year, the super fund paid out around $222 million in benefits to members across more than 10,000 income protection claims, they added.
Last year, some 15,000 super fund members signed up for a lawsuit against QSuper, alleging they were wrongly charged excessive premiums for their life insurance policies.
Also represented by Shine Lawyers, the class action alleged that the Queensland-based super fund breached their obligations by failing to notify members of important changes to life insurance policy premiums relating to occupational rates and members’ entitlements to elect standard rates, white collar rates, and professional rates.
As a result, thousands of fund members were alleged to have been charged significantly more for their life insurance than they should have been.
