Changes to Low Balance Superannuation

If you have more than one superannuation account and have purposely left a small balance in order to retain insurance in that fund, then this is a must read for you.

Changes to Low Balance Superannuation

As of 1 July 2019, there will be changes made to superannuation accounts classified as having a low balance. The threshold for the low balance classification is $6,000. Anything under this balance will automatically be classified as a “low balance super account”.


Less Fees

The changes to low balance accounts are intended to assist in stopping or slowing funds from being eroded by fees over time. If your account is classified as low balance, fees will be capped at 3%. All exit fees will be banned, in 2017 Australian Prudential Regulation Authority (APRA),  reported super members lost approximately $52 million in exit fees.


Outside of changes to fees, the major change and that which requires the most attention, is the intent to consolidate superannuation accounts that are classified as having a low balance (less than $6,000) and being inactive, due to not receiving a contribution in the prior 16 months. This would see the funds transferred from this super account into your active account and the low balance account shut down.

When the account is shut down, all existing insurance policies in the fund will be cancelled. 

The implications of having insurance cancelled can be significant. It is widely accepted that thousands of small superannuation accounts are maintained in the public system by SMSF trustees purely for insurance purposes.

Superannuation funds can hold life, total and permanent disablement and income protection policies on your behalf. Large super funds also often offer ‘automatic acceptance limits’, which allow you take out cover up to pre-specified limits without having to undergo personal underwriting, which may include medical tests and so on.

In the event your existing cover is cancelled, you may not be able to get new cover on the same terms. You may need to disclose medical conditions that have arisen since you originally applied, and have higher premiums or exclusions as a result, or you may no longer be eligible for cover at all through that fund. In many circumstances, particularly if you are older, or have poor health or a high-risk occupation, your existing policy may be the only insurance policy you hold. It may also be the only affordable insurance you are able to get.

Lost Super

In the case that the ATO cannot auto consolidate a balance into a members active account, the ATO will hold these funds until they are claimed.



Notify your Superannuation Fund

If you want your low balance account to remain active and avoid auto consolidation you must notify your superannuation fund using the ATO form available here.

Find any inactive Accounts

If you are unsure as to whether you have a low balance account in your name, you should take steps to find any super accounts that are presently in your name. You can do so through the ATO’s lost and unclaimed super service, more information available here.

The changes should act as a timely reminder for the need for insurance. Insurance is critical if you have debt, dependents or rely on your income for financial security. Our Financial Planning team can help you to organise your insurances, in order to make sure you are adequately covered to protect your family in the case that something were to happen. Get in touch today.

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