How we'll implement this change on the platform

From 1 July 2019, super accounts with a balance less than $6,000 (at 30 June or immediately prior to exit), will have any fees in excess of 3% of that balance refunded to the account within three months.

This rule applies to each individual account (even if a client has other accounts in the Fund with a balance over $6,000).

Where a fee rebate is required, the calculation will include:

• Netwealth administration costs (including the international securities administration fee, the cash administration fee and the effect of family fee rebates), and

• Quarterly Operational Risk Financial Reserve (ORFR) amounts.

Fees excluded from the calculation include:

• Advice fees,

• Activity fees (eg. brokerage, offline transaction fees), and

• Fees in relation to insurance and Managed Accounts.

From 1 July 2019, clients must maintain a minimum account balance when requesting a benefit payment, roll out or internal transfer to another account in the Fund: 

• Partial roll out request submitted via SuperStream – client must leave at least $6,000
• Partial transfer/benefit payment request submitted online or via a form – client must leave at least $10,000
• Partial internal transfer request to another account – client must leave at least $10,000.

Accounts with balances under $6,000 as at 30 June or 31 December that have been inactive for 16 months or more will need to be transferred to the ATO as part of the Fund’s unclaimed monies process.

The reason being, under this part of the Protect Your Super package an account is classified as inactive if none of the following actions occurred in the 16 months leading up to 30 June or 31 December:

• A contribution or rollover was made,

• A client made an investment choice (i.e. performed a buy/sell/switch or updated their reinvestment/DRP or auto selldown profiles),

• A client added or modified a binding death benefit direction,

• A client met an eligible condition of release (i.e. reached age 65, commenced a Transition to Retirement or income stream account).

A client can prevent their account being transferred to the ATO by taking one of the actions listed above, or by submitting a declaration confirming they want their 'inactive' account to remain in the Fund.

Inactive accounts that hold insurance cover are excluded from this process and are not at risk of having their account transferred to the ATO.

In early July and January each year, Netwealth will send each adviser a list of accounts that are classified as inactive and will be transferred to the ATO (by 31 October or 30 April) unless the client takes an action on their account or completes the declaration form.

Please find a copy of the declaration form here.

We'll provide these client declaration forms to the ATO. Once a client has made a declaration, they won't be considered by the inactive low balance account consolidation process for a further 16 months.

If an account has been inactive for 16 months or more, any insurance cover should be cancelled.

Under this part of the Protecting Your Super package, an account is classified as inactive if a contribution or rollover has not been received in the previous 16 months.

Super funds are required to write to clients holding an account that reaches nine, 12 and 15 months of continuous inactivity. The communication must confirm details of the insurance cover held and premium amounts paid and how they can make an enduring election.

A client can sign an enduring election form to declare they want to continue holding their insurance cover even if their account is (or becomes) inactive.

Super funds are also required to write to clients to confirm receipt of an enduring election and highlight that cover can be cancelled by the client at any time. 

Important information

In early May, Netwealth communicated to clients and advisers that insurance held through inactive accounts would not be cancelled automatically.

This was on the basis that the legislation in its current form provides an exemption for fixed-term cover (and all cover held through the Fund is for a fixed term).

However, APRA have since clarified their view that insurance held through super is not intended to be exempt (and we expect the legislation will be updated in due course to reflect the intent of the policy). Netwealth is currently clarifying its position.

In coming weeks, we may need to re-communicate to clients who hold insurance cover through an inactive account confirming we'll need to automatically cancel their cover if they reach 16 months of continuous inactivity. We'll provide you with advance notice of any such communications being issued to your clients.

A member can avoid their cover being cancelled by making a rollover or contribution, or by returning an enduring election form.

From 1 July 2019, as an ongoing process, we'll send Inactivity Notices to any clients who reach nine, 12 or 15 months of continuous inactivity and haven't provided an enduring election form. 

Application forms (for group and retail insurance cover) will be updated in due course to enable clients to make an enduring election at the time of making their application.