Changes to insurance premiums and cover in the ESSSuper Accumulation Plan and other 1 July 2021 superannuation changes

Effective 1 July 2021, there are some important changes you need to know about regarding:

1. Insurance premiums and cover in the ESSSuper Accumulation Plan
2. Changes to the transfer balance cap and contributions caps.
    

1. Your insurance premiums and cover

There are several changes to insurance in the ESSSuper Accumulation Plan you need to be aware of.
 

Insurance premium increase

On 1 July 2021, the cost of your Death and TPD cover will increase. There is no change to the cost of Income Protection cover.

The past year has highlighted the importance of insurance, which has given people additional peace of mind. This increase in premiums is determined by our Insurer and reflects changes in claims made and paid, and the policy changes described below.

The new insurance premium rate tables are at the bottom of this page.

The premium changes will automatically apply to your Accumulation Plan insurance from 1 July 2021. You can cancel, change, or increase your insurance cover anytime by completing the Vary Your Insurance Accumulation Plan (ES167) form, available at esssuper.com.au/forms
 

Improvements to your cover

The following improvements to insurance cover will apply from 1 July 2021:

1. If you become unemployed due to illness or injury, a broader set of assessment criteria and definitions will apply to Total and Permanent Disablement (TPD) claims for up to two years (24 months). This means a range of claims that would not have been successful under the current rules will be more likely to be accepted under the new rules. Currently, narrower claim assessment definitions apply after three months of unemployment.
    
2. To support an increasing number of people working past age 65, the maximum age for Death and TPD cover will extend from 65 to 70. This will automatically apply if you turn 65 on or after 1 July 2021 and your insurance cover will cease at age 70 (instead of 65).
   
   For members with Fixed Death and TPD cover, the TPD component of their cover is currently reducing by 20% per year between ages 61 and 65 with cover ceasing at 65. Under the new rules, the TPD component of Fixed Death and TPD cover will reduce by 10% per year between ages 61 and 69. Cover will cease at age 70.
   
   Members with Unitised Death and TPD cover will have their cover automatically extended to age 70.
   
   If you don't want to continue your insurance cover to age 70, you can cancel your insurance cover in the Accumulation Plan at any time.
    

Why have insurance cover?

It is important to remember that having adequate insurance is vital for providing for your loved ones should an unforeseen event occur. What's more, holding insurance through super can be a straightforward and cost-effective way to provide this protection for you and your family.

If you're not sure how much (if any) cover is right for you, book a virtual appointment with one of our Member Education Consultants at esssuper.com.au/contact-us for general advice about insurance in the Accumulation Plan. If you're looking for personal advice relating to your personal financial situation or needs, our qualified Financial Advisers^* are here to help.
 

About our Insurer

We review our insurance arrangements each year to ensure our offers remain competitive and meet our members' needs. In 2020 we conducted an open market tender for our insurance offer within the Accumulation Plan. This resulted in the reappointment of Colonial Mutual Life Assurance Society Limited (CMLA), formerly known as CommInsure, for an additional two years until 30 June 2023.

On 1 April 2021, the Federal Court approved the sale of CommInsure by the Commonwealth Bank to AIA Australia Limited (AIA). As a result, AIA replaced CommInsure as the issuer of the ESSSuper insurance policy and the Insurer for our members. AIA is one of the biggest life insurers in Australia, with a wide range of services and support.

Our Accumulation Plan Product Disclosure Statement (PDS) will be updated on 1 July 2021 to reflect the change to insurance premiums and cover. For further information on insurance, please refer to the Accumulation Plan PDS and incorporated (AP.2) Insurance guide at esssuper.com.au/pds
 

2. Superannuation changes effective 1 July 2021

There are a number of upcoming changes to superannuation which may impact you. Details of two changes are provided below, and information on other changes is available at esssuper.com.au/news
 

Indexation of transfer balance cap

The transfer balance cap is a lifetime limit on the total amount of super you can transfer into retirement phase income streams, pensions, and/or annuities.

Effective 1 July 2021, the transfer balance cap will be indexed from $1.6 million to $1.7 million. Your personal cap amount will depend on how much super you have transferred from your accumulation phase super account and/or transition to retirement income stream into a retirement phase income stream before 1 July 2021.

Below is a table showing how the date and the amount of super transferred will determine your personal transfer balance cap:

The transfer balance cap doesn't apply to Working Income Stream accounts (transition to retirement income streams).

The Australian Taxation Office (ATO) is responsible for the administration of the transfer balance cap. Members wanting information about their transfer balance cap should view this at ATO online services (available through your myGov account at my.gov.au/login). ESSSuper does not have access to your transfer balance cap information. Further information is available by searching 'transfer balance cap' on the ATO website at ato.gov.au
 

Indexation of contribution caps

From 1 July 2021, the contribution caps are increasing.

Concessional (pre-tax) contributions

The concessional contributions cap is increasing from $25,000 to $27,500 per financial year.

Concessional contributions include your employer's mandatory Superannuation Guarantee (SG) contributions, additional voluntary contributions (e.g. salary sacrifice), and personal contributions you may make for which you claim a tax deduction. These contributions are taxed at the super contribution tax rate of 15%. Where your combined income including concessional contributions exceeds $250,000 per year, an additional 15% (30% in total) tax will apply to concessional contributions relating to the income exceeding $250,000 per year.

Non-concessional (after-tax) contributions

The non-concessional contributions cap is four times the concessional contributions cap. Accordingly, the non-concessional contributions cap will increase from $100,000 to $110,000 per financial year. Non-concessional contributions are contributions you make from your after-tax income.

If you have a total superannuation balance of $1.7 million or more at 30 June 2021, your non-concessional contributions cap is zero and any non-concessional contributions you make will be subject to excess non-concessional contributions tax and taxed at the highest marginal tax rate.

For more information about contribution caps, please refer to the Accumulation Plan PDS and incorporated (AP.1) Contributing to Super guide available at esssuper.com.au/pds

^* ESSSuper Financial Advisers are authorised representatives of Link Advice Pty Ltd (Link Advice). Link Advice holds a current Australian Financial Services Licence No. 258145 and is responsible for the financial services provided to you. ESSSuper has an arrangement with Link Advice Pty Ltd to provide financial advice to ESSSuper members. ESSSuper pays Link Advice a fee for this service. Neither the Board, nor the Victorian Government, guarantee or endorse any recommendations made by Link Advice, or are responsible for the advice and actions of Link Advice.

Insurance premium table – Unitised cover:

Death only cover - $0.5450 per unit per week. Death and TPD cover - $1.1217 per unit per week.

Amount of Death Only or Death and TPD cover per unit

Insurance premium table – Fixed cover:

Annual cost of Fixed Death Only or Death and TPD cover (per $1,000 of Fixed cover)

Emergency Services Superannuation Board (ABN 28 161 296 741) (ESSB), the Trustee of the Emergency Services Superannuation Scheme (ABN 85 894 637 037) (ESSSuper).

Normal terms and conditions and waiting periods apply. The information contained on this page is of a general nature only. It should not be considered as a substitute for reading ESSSuper's Product Disclosure Statement (PDS) that contains detailed information about ESSSuper products, services and features. Before making a decision about an ESSSuper product, you should consider the appropriateness of the product to your personal objectives, financial situation and needs. It may also be beneficial to seek professional advice from a licensed financial planner or adviser. An ESSSuper PDS is available at esssuper.com.au/pds or by calling 1300 650 161.

Benefits in ESSSuper's Accumulation Plan, Income Streams and Beneficiary Account products are not guaranteed or underwritten by the Victorian Government or ESSSuper, and ESSSuper does not come under the jurisdiction of the Australian Financial Complaints Authority. ESSSuper comes under the jurisdiction of the Victorian Civil and Administrative Tribunal.

ESSSuper provides insurance cover to members through group insurance policies that the Board holds with AIA Australia Limited (AIA). The policies were originally issued by The Colonial Mutual Life Assurance Society Limited (CMLA), otherwise known as CommInsure, and transferred to AIA on 1 April 2021 by way of a statutory asset transfer of CMLA's life insurance business to AIA under Part 9 of the Life Insurance Act 1995 (Cth). AIA is part of the AIA Group, the largest publicly listed life insurance group in the Asia Pacific. Copies of the insurance policy documents are available on request. Cover is subject to the terms of the applicable policy.