TAL Research Paper - Life insurance auto-consolidation Final

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Life insurance & auto-consolidation –
Risk versus return
An examination of impacts and options
Gavin Lai, Senior Product Manager, TAL
Katie Wilson, Group Life Marketing and Communications Manager, TAL

9 March 2012 Life Insurance and auto-consolidation – An examination of impacts and options - TAL Page 2 of 23
Table of Contents
1. Executive summary..............................................................................................................3
2. Auto-consolidation – Background and outcomes............................................................4
2.1. Background..................................................................................................................4
2.2. Proposed auto-consolidation process..........................................................................5
2.3. Research aims and limitations.....................................................................................6
2.4. Projected account rationalisation outcome – $1,000 threshold ...................................6
2.5. Projected account rationalisation outcome – $10,000 threshold.................................7
2.6. Projected insurance exposure – $1,000 threshold ......................................................8
2.7. Projected insurance exposure – $10,000 threshold ....................................................9
2.8. Summary of projected insurance exposure .................................................................9
2.9. Sample examination of cover levels ..........................................................................10
2.10. Lack of guidance on insurance where consolidation occurs .....................................10
3. Insurance impacts and road test of 4 possible models .................................................11
3.1. Insurance impacts......................................................................................................11
3.2. Four possible automatic consolidation models..........................................................13
3.3. Summary and comparison of outcomes under all models.........................................17
3.4. Assessment of impacts of each model ......................................................................18
3.5. Level of impact arising from each model ...................................................................19
4. Conclusion..........................................................................................................................20
4.1. We all want to throw out the bathwater, but what about the baby? ...........................20
5. Appendices .........................................................................................................................21
5.1. Appendix 1 – Account projections for the top 10 funds in each sector......................21
5.2. Appendix 2 – Insurance projections for the top 10 funds in each sector...................22
5.3. Appendix 3 – Insurance projections f for each auto-consolidation model .................23

On 21 September 2011, the Government released their proposals on key design aspects of the
Stronger Super reforms. These included plans for the automatic consolidation of lost and inactive
superannuation accounts. In this paper we examine the government’s proposed auto-consolidation
process as well as three alternative models that could apply to the insurance cover attached to inactive
accounts. We also provide comment on the implications for members, government and the industry for
each of these options.
1. Executive summary
The combination of 33 million superannuation accounts with a workforce of just 11.3 million employees
clearly shows that Australia has many more super accounts than actually required.
As part of the Stronger Super reforms, the government has indicated this oversupply is unnecessary, and
potentially detrimental to account holders, because it creates unjustifiable costs in terms of fees and
charges. However, this oversupply has also resulted in undeniable benefits in the form of wholesale,
automatic insurance coverage for super fund members.
We know that the government is seeking to address this oversupply problem by facilitating a reduction in
the number of unnecessary and lost superannuation accounts by approximately two thirds. One of the
actions to reach this objective is the automatic consolidation of lost and inactive accounts (two years
without contributions or rollover) with a balance of less than $1,000 and accounts in eligible rollover funds
into a member’s current active account
1
. In the latter half of 2014 the threshold for auto-consolidation of
lost and inactive accounts may be increased to at least $10,000.
Given that we’ve also seen the government recognise life insurance as a key element within
superannuation through the MySuper reforms, the government and the industry should be alert to any
potential risks or unintended consequences of auto-consolidation to the levels of life insurance cover.
We have identified that 31% of the 11.8 million inactive accounts with a balance less than $1,000 are likely
to have insurance – so any automatic consolidation rule has the potential to affect 3.6 million currently
insured members. We now need a Government position on how insurance should be dealt with where it is
held in a duplicate account.
In addition to analysing the potential impacts of the government’s proposed approach, we have developed
and analysed three alternative automatic consolidation approaches to the handling of insurance. Our
projections show that while account reduction correlates strongly with insurance loss, it is also possible to
minimise insurance loss without significantly impacting account reduction.
According to our projections, which are based primarily on APRA fund data
2
, secondary research sources
such as Rice Warner and SuperRatings, and our own estimates, the maximum expected reduction
percentage would be 35%. If insured accounts were excluded from this process – a reduction percentage
of 23% would still be achieved – whilst mitigating the loss of insurance cover to members and their
beneficiaries and reducing the administrative complexity of addressing insurance within the process of
consolidation.
We note that our projections incorporate a substantial degree of estimation, given there is in fact very little
relevant and concrete data available for these types of projections. Therefore it is imperative that more
information is obtained to enable us to better understand the potential issues.
1
Stronger Super Information Pack 21 September 2011, page 12
2
This paper uses data from the APRA Annual Superannuation Bulletin Jun 2010. We note that this data has recently been updated
to June 2011 (on 29 February 2012)

2. Auto-consolidation – Background and outcomes
Logical consequences are the scarecrows of fools and the beacons of wise men.
Thomas Huxley
2.1. Background
The elimination of multiple superannuation accounts is a key element of the Stronger Super reforms aimed
at encouraging “greater efficiency and lower fees”.
3
The Government has noted that there are
approximately 33 million superannuation accounts in Australia, but only approximately 11.3 million
employed persons – as shown in
Table 1 below.
Table 1. Number of super accounts vs. number of workers
This marked oversupply works out to around 2.8 superannuation accounts per working Australian. The
Government’s aim is to encourage rationalisation of these accounts by way of a “steady reduction in the
number of unnecessary and lost superannuation accounts,”
4
to a number that is closer to the number of
actual working Australians.
This reduction would be achieved through a number of approaches:
- Supporting member-initiated account consolidation via fund search tools;
- Implementing measures to reduce the proliferation of new accounts;
- Mandating the consolidation of multiple accounts for individuals in the same fund; and
- Instituting a Government-initiated clean-up of existing multiple accounts via automatic
consolidation of certain existing accounts.
3
The Hon Bill Shorten, A better deal for super fund members (21 September 2011)
<http://ministers.treasury.gov.au/DisplayDocs.aspx?doc=pressreleases/2011/131.htm&pageID=003&min=brs&Year=&DocType=>
4
Stronger Super Information Pack, 21 September 2011, 12.
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Numberofaccounts('000s)
Year
NO. OF SUPER ACCOUNTS VS. NO. OF WORKERS
No. of super
accounts
Total labour
force
Total
employees
Source(s): APRA Annual Superannuation bulletin, June 2010 (superannuation account data); ABS Australian Social Trends, cat. no. 4102.0 (labour force and employment
data).

The SuperStream package of reforms outlines a two-stage automatic consolidation process. Beginning in
January 2014, they will target any accounts that are “inactive” (defined as two years without contributions
or rollover) and have a balance of less than $1,000, as well as accounts in eligible rollover funds. These
accounts will then be consolidated into the member’s current active account. In the latter half of 2014 the
threshold for automatic consolidation will increase to at least $10,000.
2.2. Proposed auto-consolidation process
The auto-consolidation process will be as follows:
1. The ATO will conduct a yearly review of accounts to identify any multiple accounts meeting the
required criteria.
2. The ATO will then determine which of the multiple accounts the “active account” is (exact details not
yet confirmed).
3. The active fund will be advised of the other accounts, and will be expected to arrange consolidation of
those other accounts according to the following process:
a. The member will be sent correspondence advising them that the active fund will
commence the automatic consolidation of the other accounts into the active fund unless
the member indicates that they wish to retain those other accounts i.e. the member “opts-
out”. This correspondence will advise the member of the need to consider insurance cover
and other relevant information before deciding.
b. If the member does not respond to the correspondence in the prescribed time, the active
fund will contact the other funds to arrange consolidation.
c. The trustees of the other funds will be required to transfer the account balance to the
active fund within a prescribed time.

2.3. Research aims and limitations
Based on the rules proposed above, is clear that the minimum information required to reasonably form a
view on the outcomes of the consolidation process would include the following:
- Number of member accounts
- Number of “inactive accounts” (no rollover or contribution for two years)
5
- Number of members with less than $1,000 account balance (January 2014 – first phase)
- No. of members with less than $10,000 account balance (late 2014 – second phase)
With the exception of the first item, the above information is not publicly available. Table 2 shows just how
little reliable and publicly available information exists.
Information type Source Details
Number of member accounts APRA APRA Annual Superannuation Bulletin Jun 2010
Number of “inactive accounts” Some available Superratings SMART – voluntary fund reporting
Number of members with <$1,000 balance Not available -
Number of members with <$10,000 balance Not available -
Table 2. Summary of auto-consolidation information sources
This means it is incredibly difficult to accurately project the outcome of the proposed account consolidation
process with any degree of certainty. We believe it is important to recognise the following:
1. The authors of the reforms appear not to have relied upon or reviewed any specific data in
developing the reforms or proposing them.
2. Account consolidation is likely to have an enormous effect upon the entire superannuation industry.
3. There is value in attempting to project the outcomes in order to prepare, and to assess any direct,
and indirect consequences to each industry participant.
This paper aims to project a range of possible automatic consolidation outcomes using statistical data and
a range of key assumptions (each of which are explained where used).
These projected outcomes are then used to understand and assess the potential impact upon an area of
key importance that the reform process has to date ignored – any life insurance attached to accounts
being consolidated.
It is important to note projections, for the most part, are based on reasoned assumption rather than
specific data.
2.4. Projected account rationalisation outcome – $1,000 threshold
The following section examines the number of accounts likely to be targeted during the proposed first
phase, i.e. inactive accounts with less than $1,000 in January 2014 (“Phase 1”).
We confined our analysis to the top 10 funds from each APRA designated fund functional classification on
the basis that this was a broadly representative group covering 71% of the total market (measured by
number of members). In addition, we:
• ignored the presence of insurance;
• assumed that accounts targeted under Phase 1 would disappear as a result of the initiative; and
• have made a number of key projections and assumptions
6
.
5
Per the proposed definition within Stronger Super Information Pack, 21 September 2011, 12.
6
A summary of our figures and sources can be found in the Appendix.

The results are as follows:
*APRA functional classification
No. of accounts (‘000s) - Top 10 funds from each major fund segment – <$1,000
Fund type* No. accounts before
consolidation
No. accounts inactive
with < $1,000 bal.
No. accounts after
consolidation
Percentage reduction
Corporate 376.9 54.9 322.0 15%
Industry 8,311.5 1,498.7 6,812.8 18%
Public sector 2,026.4 413.3 1,613.1 20%
Retail 7,208.6 1,094.4 6,114.2 15%
Retail - ERF 5,426.9 5,318.3 108.6 98%
Total 23,350.2 8,379.6 14,970.7 36%
Table 3. Projected account consolidation outcomes sub-$1,000
We project that Phase 1 will identify 8.3 million out of 23.3 million accounts or 36% of all accounts held
within the top 10 funds from each major fund segment as being inactive with an account balance of less
than $1,000.
Applying this percentage reduction to the total 32.8 million accounts
7
we project that 11.8
million accounts are likely to be targeted as inactive with an account balance of less than
$1,000.
2.5. Projected account rationalisation outcome – $10,000 threshold
The following section examines the outcomes post the second phase, targeting inactive accounts with less
than $10,000 (“Phase 2”). We employed the same methodology used in section 2.4, while excluding those
accounts previously identified in section 2.4 as being inactive, with an account balance less than $1,000.
No. of accounts (‘000s) - Top 10 funds from each major fund segment – <$10,000
Fund type* No. accounts before
consolidation
No. accounts inactive
with < $10,000 bal.
No. accounts after
consolidation
Corporate 322.0 47.6 322.0 15%
Industry 6,812.8 1,298.8 5,514.0 19%
Public sector 1,613.1 358.2 1,254.9 22%
Retail 6,114.2 948.5 5,165.7 16%
Retail - ERF 108.6 97.7 10.9 90%
Total 14,970.7 2,750.8 12,267.5 18%
Table 4. Projected account consolidation outcomes sub-$10,000
We project that Phase 2 will identify a further 2.7 million out of the remaining 14.9 million accounts, or
18% of all accounts held within the top 10 funds from each major fund segment, as being inactive with an
account balance of less than $10,000.
8
, we project that a further
5.9 million accounts are likely to be highlighted as inactive with an account balance of less
than $10,000.
7
Annual Superannuation Bulletin, APRA, June 2010
8

2.6. Projected insurance exposure – $1,000 threshold
We have now identified the potential number of accounts that will be affected by Phases 1 and 2, the
majority of which have probably been set up in the past by (or for) the member as default superannuation
accounts.
Given the universal acceptance by superannuation trustees to incorporate some minimum level of life
insurance within default superannuation arrangements, often in the form of death and/or total and
permanent disablement (“TPD”) insurance, it is also likely that a significant number of these accounts will
have life insurance attached to them.
While it is becoming increasingly common for trustees to incorporate some form of income replacement
insurance in the form of income protection (or group salary continuance), we have not reviewed income
protection in this report.
To identify how many of the Phase 1 and Phase 2 inactive accounts may have insurance, it is necessary
to take into account the following:
• Is insurance cover being offered to members who join on a default basis or is it available on a
voluntary (by request and/or application) basis;
• How many members are likely to have cancelled or “opted-out” of this insurance;
• Will any default insurance continue under a member’s account after termination of employment;
• What rules may apply to any continuing cover, eg. minimum account balance, or specified time
frames.
Table 5 summarises our findings after reviewing the top 10 funds in each fund segment and accounting for
the considerations above.
No. of inactive accounts with insurance (‘000s) – <$1,000
Fund type* No. accounts inactive with <
$1,000 bal.
No. accounts inactive with <
$1,000 bal. with insurance
Percentage of inactive accounts
with insurance
Corporate 54.9 32.8 60%
Industry 1,498.7 1,350.40 90%
Public sector 413.3 205.1 50%
Retail 1,094.4 1,031.90 94%
Retail - ERF 5,318.3 0.7 0%
Total 8,379.6 2,620.90 31%
Table 5. Projected insurance exposure – <$1,000
We project that 2.6 million out of the 8.3 million inactive accounts, or 31% of those accounts held within
the top 10 funds from each major fund segment, will have insurance attached to them.
We note that 5.3 million of these inactive accounts are unlikely to have any insurance at all – namely the
ERF accounts.
Applying this insured account percentage to the total 11.8 million inactive accounts (under section
2.4) we project that 3.6 million of these accounts will have insurance.

2.7. Projected insurance exposure – $10,000 threshold
The following section examines the outcomes post the second phase targeting inactive accounts with less
than $10,000. We employed the same methodology used in section 2.4, excluding those accounts
previously identified in section 2.4 as being inactive with an account balance less than $1,000.
No. of inactive accounts with insurance (‘000s) – <$10,000
Fund type* No. accounts inactive with <
$10,000 bal.
No. accounts inactive with <
$10,000 bal. with insurance
Percentage of inactive accounts
with insurance
Corporate 47.6 28.4 60%
Industry 1,298.8 1,170.4 90%
Public sector 358.2 177.7 50%
Retail 948.5 894.3 94%
Retail - ERF 97.7 0.0 0%
Total 2,750.8 2,270.8 83%
Table 6. Projected insurance exposure – <$10,000
We project that Phase 2 would affect a further 2.2 million or 83% of all accounts held within the top 10
funds from each major fund segment that are inactive with an account balance of less than $10,000.
Applying this insured account percentage to the total 5.9 million inactive accounts (under section
2.5) we project that 4.9 million of these accounts will have insurance.
2.8. Summary of projected insurance exposure
It is clear from our research that a significant number of accounts will have death and/or TPD insurance
benefits. Our projections regarding the total number of insured accounts that will be targeted for
consolidation under the current proposed automatic consolidation rules are summarised in Table 7.
No. of accounts (‘000s) – Overall projected insurance exposure
Projected total market Percentage of total market
No. of accounts pre-consolidation 32,858 100%
No. of accounts inactive and <$1,000 11,828 36%
No. of accounts inactive and <$1,000 and insured 3,667 11%
No. of accounts inactive and <$10,000 5,914 18%
No. of accounts inactive and <$10,000 and insured 4,909 15%
Table 7. Impact of auto-consolidation on insured accounts
Under the proposed rules, 8.5 million insured accounts will be targeted for consolidation
during Phase 1 and Phase 2, which equates to 25% of all accounts.

2.9. Sample examination of cover levels
Our findings have confirmed the likely presence of insurance within many accounts targeted for automatic
consolidation. In order to provide some meaningful context, we also analysed the average level of life
insurance (death and/or death & TPD cover) held in superannuation accounts. Given the huge variation
across the industry, we elected to sample a specific age group, age 39, from our standard representative
group of the top 10 funds.
Average default cover level for 39 yo – Top 10 funds from each major fund segment
Fund type* No. of funds offering default cover9
Average default cover (where provided)
Corporate 3/10 $256,228
Industry 9/10 $200,992
Public sector 3/10 $297,274
Retail 9/10 $97,734
Retail - ERF 0/10 $0
Average 5/10 or 50% $170,446
Table 8. Average default cover level for 39 yo
A 39 year old with default insurance holds approximately $170,000 death and/or death & TPD
life insurance cover under each default superannuation account.
2.10. Lack of guidance on insurance where consolidation occurs
Having established the very real impact of the proposed automatic consolidation on insurance
arrangements within targeted accounts, we note that so far, the rules relating to the life insurance (death,
terminal illness, TPD, or income protection insurance) that may be attached to any inactive accounts have
not been discussed by Government.
This makes it impossible at this stage for us to project what is likely to happen to this insurance under
Phase 1 and 2, and for members and industry stakeholders (trustees, insurers and Government) to
prepare. It is our understanding that consultation on the issue of automatic consolidation and insurance is
currently underway, and this research paper aims to provide
The main two likely approaches are:
1. All insurance in the transferred/closed fund ceases.
2. Insurance in the transferred/closed fund is transferred to (or more correctly, matched by)
the receiving fund.
Both of these approaches will have significant impacts for members, superannuation funds, insurers, and
ultimately, the government. Section 3 of this paper explores those impacts.
9
We were not able to source sufficient information for many of the funds, and consequently, some funds were marked as not
providing default cover. In reality it is likely that these numbers are much closer to 100% with the notable exception being ERFs
which do not offer default insurance cover.

3. Insurance impacts and road test of 4 possible
models
3.1. Insurance impacts
The consolidation of accounts is intended to reduce the number of superfluous superannuation accounts,
thereby reducing the cost to members directly (through savings in administration and management fees)
and indirectly, through improved fund efficiencies gained by removing small accounts. These admirable
aims should be weighed against the loss of any insurance attached to a consolidating account. We explore
the insurance implications from the perspective of members, the government, and Trustees (and their life
insurers) below.
Insurance issues for members
1. Delayed realisation in times of greatest need
This is the clearest issue for members (or their beneficiaries), and while it is the most obvious, it must
be recognised that members may not realise the full impact of any cancellation of their cover until
they need to claim – this lack of awareness is especially the case if cover is cancelled where
members take no action.
2. The illusion of informed consent
It is an established principle that the vast majority of members do not actively respond to
correspondence, meaning that the insurance cover outcome that applies in the event of no response
from the member (whether merger or cancellation) will inevitably be the outcome for the
overwhelming majority of members. We would argue strongly against the notion that members would
make an informed decision if provided relevant information.
3. Uninformed decision making
If cover is cancelled or transferred to another insurer as a result of an automatic consolidation
process, there is a real risk that members will not appreciate the value and importance of insurance
cover. Ideally members should have access to financial advice and/or information from their fund
before electing or omitting to act.
4. Loss of future insurability
Members who lose insurance may not be able to be insured again or may face increased premiums if
their health circumstances have changed since they received the coverage.
5. Further increase to the “insurance gap”
The insurance gap in the Australian market is estimated to be around $669bn
10
. The introduction of
near-universal insurance cover through default superannuation accounts has been a major factor in
the narrowing of this significant gap between the life insurance needs of the average member, and
their actual life insurance coverage.
6. Multiple, default insurance, even though not chosen is not automatically bad
As shown in our analysis, the average 39 year old would have approximately $170,000 coverage in
the event of death or TPD. Even if this person held 3 separate superannuation accounts with default
coverage under each providing total cover of $510,000, they would not be over-insured assuming an
10
Rice Warner, June 2010

average-sized mortgage and carer obligations. There is no doubt that some members, such as those
in casual jobs and younger employees, will likely have too much insurance cover. But care must be
taken to avoid stripping cover away from those members who do need it.
7. Pricing changes
Members currently enjoy the benefit of low premium rates for life insurance coverage under their
superannuation. This benevolent pricing situation exists because coverage has been:
• automatic, reducing the impact of anti-selection (e.g. members in poor health taking out cover);
and
• predictable, given the majority of members joined up under default arrangements tend to remain
in the fund – driving the proliferation of accounts.
While clear that members would benefit from the number of super accounts being reduced, it should also
be recognised that it will take some time for group life insurance pricing to adjust to any large-scale shift in
insured membership.
Insurance issues for Trustees, Insurers and Government
1. Increased complaints and potential for loss to members and/or beneficiaries and claims for
compensation
The logical consequence of the loss of cover, in circumstances where members’ approval is not
required, is a rise in the number of complaints and claims against Trustees and Insurers for
compensation. There may be a need for statutory indemnification against claims from members
where cover cancellation has occurred in accordance with the mandated automatic consolidation
process – this in turn could lead to dissatisfaction with the initiative. This could be alleviated through
the establishment of a no-fault compensation fund or similar.
2. Increased reliance on Government safety net where insurance cover is lost
Obviously where members are unable to claim insurance benefits as a result of losing coverage
through the process of automatic consolidation, they will need increased Government-funded support.
3. Immediate “big-bang” impact on Trustees and Insurers
There will be an immediate, potentially large impact on funds and insurers, depending on how many
default accounts are cancelled after the consolidation occurs – which cannot be predicted until the
consolidation takes place.
4. Pricing changes
Insurance pricing will be impacted, as the overall insurance premium pool contracts – potentially
triggering policy changes and affecting capital arrangements.
5. Transition costs for Trustees and Insurers
There will be significant insurance transition costs for trustees and insurers (e.g. contract alteration
and renegotiation, and member communications) required to implement any new process.
6. Trustee guidance and statutory indemnification may be required
In light of their duties to protect members’ interests, Trustees may need to provide clarity around how
they should deal with the potential negative impacts of automatic consolidation on members. This
may be achieved by way of statutory indemnification.

3.2. Four possible automatic consolidation models
Having established the need to consider insurance impacts of any automatic consolidation process, we
explore four possible models and the likely account rationalisation and insurance impacts, recognising the
countervailing aims of reducing multiple accounts and insuring against forced, early retirement due to ill-
health through insurance. Each model is examined in light of account reduction, insurance impacts and
implementation complexity.
Model 1: Any insurance held in an inactive account is cancelled, unless the member opts out.
This model will result in the largest reduction of inactive superannuation accounts but will also result in the
greatest loss of attached life insurance.
We have projected the likely outcomes under this model during Phase 1 in Table 9 below. Note we have
assumed a low opt-out rate based on reliable past experience.
Model 1 projected outcomes (<$,1,000) – Top 10 funds from each major fund segment
Fund type* No. accounts inactive
with < $1,000 bal.
No. of insured
amounts cancelled
Total no. accounts
after consolidation
from total
Corporate 54.9 31.7 322.0 14%
Industry 1,498.7 1,439.3 5,514.0 18%
Public sector 413.3 373.1 1,254.9 20%
Retail 1,094.4 1,051.1 5,165.7 15%
Retail - ERF 5,318.3 0.7 10.9 96%
Total 8,379.6 2,895.9 12,267.5 35%
Table 9. Model 1 projected outcomes (<$,1,000) – Top 10 funds
We project that under Model 1, Phase 1 would result in a 35% reduction in the total number of
superannuation accounts and the elimination of 2.8 million insured accounts from 8.3 million inactive
accounts held within the top 10 funds from each major fund segment.
11
we project that 11.5
million accounts will remain after Phase 1, and 3.6 million insured accounts (and the
insurance cover applicable within those accounts) are likely to be eliminated.
11

Model 2: Any insurance held in an inactive account is merged into the active account, unless the
member opts out.
Model 2 will not only meet the government’s objective with the highest rate of account consolidation, it will
also reduce the impact to members arising from loss of insurance, by automatically (unless the member
opts out) merging any insurance cover in an inactive account into a member’s active superannuation
account.
Under Model 2, members’ cover will be altered, and/or reduced or increased, given the following:
• There is no guarantee that the “active” fund will offer the same type of insurance.
• There is often a significant difference in the way insurance cover is offered between different funds, e.g.
one fund may offer a fixed sum insured, and another fund may offer cover according to a table of
different amounts according to age – these differences would need to be dealt with.
• The premiums and insurance policy terms will vary between funds – leaving members potentially better
or worse off.
While it is unlikely that a member will be covered in exactly the same manner pre-consolidation, this
approach does ensure that a balance can be reached between rationalising account numbers and the
minimising the loss of insurance protection.
The consolidation of insurance into active accounts will also increase the administrative requirements for
fund Trustees and their insurers. We note that many funds currently support the transfer of insurance
cover on an individual member level, which may provide a starting point for the development of appropriate
industry-wide rules and processes.
with < $1,000 bal.
No. of insured
amounts cancelled
Total no. accounts
after consolidation
from total
Corporate 54.9 0.0 322.0 14%
Industry 1,498.7 0.0 5,514.0 18%
Public sector 413.3 0.0 1,254.9 20%
Retail 1,094.4 0.0 5,165.7 15%
Retail - ERF 5,318.3 0.0 10.9 96%
Total 8,379.6 0.0 12,267.5 35%

Model 2 would provide the same outcome as Model 1 in terms of account rationalisation, without the loss
of 2.8 million insured amounts from 8.3 million inactive accounts held within the top 10 funds from each
major fund segment.
12
the insurance cover
within 3.6 million insured accounts will be transferred along with the investment funds to the
active fund where possible.
Model 3: Inactive accounts with insurance attached are exempt from the automatic consolidation
phase, unless the member chooses to opt-in to consolidate and cancel any cover attached to their
inactive account.
Under this model, any accounts with insurance targeted under Phase 1 would be exempt from
automatic consolidation. It is likely that, even with the exclusion of inactive accounts with insurance
attached, a significant level of consolidation will still be achieved given the large number of uninsured ERF
accounts which would still be consolidated.
The benefits of this approach are:
1. No insurance is lost.
2. Members could still opt-in to consolidate their accounts and either cancel the insurance or apply to
merge insurance held within those accounts.
3. The impact on Trustees and insurers posed by the transferral of insurance is minimal.
These benefits need to be considered in light of the likely reduction in the numbers of accounts
rationalised. We project the outcomes in Table 11 below.
12

with < $1,000 bal.
No. of insured
amounts cancelled
Total no. accounts
after consolidation
from total
Corporate 54.9 0.0 375.8 0%
Industry 1,498.7 0.0 8,281.5 0%
Public sector 413.3 0.0 2,018.1 0%
Retail 1,094.4 0.0 7,186.7 0%
Retail - ERF 5,318.3 0.0 109.3 98%
Total 8,379.6 0.0 17,971.4 23%
superannuation accounts without the loss of 2.8 million insured amounts from 8.3 million inactive
accounts held within the top 10 funds from each major fund segment.
13
Model 3 would achieve a
reduction of 7.5 million accounts without any significant loss of insurance cover. This is a
reduction of 23%.
Compared against Model 1, this approach would mean 3.6 million accounts would not be
consolidated, while the insurance cover within those 3.6 million insured accounts will be
preserved.
Model 4: All inactive accounts with insurance cover below a pre-determined threshold are merged
and any insurance in those inactive accounts is cancelled. Inactive accounts with insurance above
the threshold are exempt from the initial automatic consolidation phase, with opt-in opportunity to
merge insurance into active account.
This model introduces a threshold insurance cover amount (e.g. $100,000 death cover) to determine
whether accounts are automatically consolidated on an opt-out basis, or exempted from the target group.
This approach would preserve any substantial insurance cover held by members in their inactive accounts,
but still mandates the elimination of lower levels of insurance cover. This would reduce the likelihood of
complaints from members on the assumption the loss opportunity has a lower value.
13

with < $1,000 bal.
No. of insured
amounts cancelled
Total no. accounts
after consolidation
from total
Corporate 54.9 22.8 338.1 10%
Industry 1,498.7 1,036.9 7,253.5 13%
Public sector 413.3 268.8 1,734.6 14%
Retail 1,094.4 757.2 6,435.9 11%
Retail - ERF 5,318.3 0.7 109.2 98%
Total 8,379.6 2,086.4 15,871.4 32%
superannuation accounts and a loss of 2.1 million insured accounts from 8.3 million inactive accounts
held within the top 10 funds from each major fund segment.
14
Model 4 would achieve
an overall reduction of 10.5 million accounts whilst confining the cancellation of insurance
coverage to 2.9 million accounts with less than $100,000 cover.
3.3. Summary and comparison of outcomes under all models
Table 13 compares the projected outcomes in terms of account reduction and potential loss of insurance
cover under each of the four models in Phase 1 (targeting all inactive accounts with balances less than
$1,000). The figures below are based on applying the results from our review of the Top 10 funds in each
fund segment.
Comparison of projected outcomes (<$,1,000) – All funds
Model 1
All cover cancelled
Model 2
All cover transferred
Model 3
Exclude insured accts
Model 4
Exclude insured accts
>$100,00 cover
Total no. of accounts before 32,858 32,858 32,858 32,858
No. accts inactive & <$1,000 bal 11,829 11,829 11,829 11,829
Total no. of accounts after 21,358 21,358 25,301 22,343
No. of accounts eliminated 11,500 11,500 7,557 10,515
% reduction in no. of accounts 35% 35% 23% 32%
No. of insured accts lost 3,667 0 0 2,936
Table 13. Comparison of projected outcomes (<$,1,000) – All funds
This provides some useful context to examine and compare the likely account reduction outcomes of each
model, and the impact to insurance cover under each model. This comparison shows that there is a
significant reduction to account numbers under Phase 1 under all of the models, including the model that
excludes insured accounts altogether.
Notably, the comparison draws into sharp relief the trade-off between maximising account reduction and
the potential for large-scale loss of insurance. For example, under Model 1, the “cost” of reducing 3.9
million accounts extra accounts would be the cover under 3.6 million accounts. Model 3 would preserve
those insurance amounts, and Model 4 would likely deliver a compromise result.
14

3.4. Assessment of impacts of each model
Table 14 below summarises and compares the broad implications of each model for the various
stakeholders. Where a particular implication identified within the table applies under a particular Model, it is
marked with “Y” for yes.
Implication for members Model 1 Model 2 Model 3 Model 4
Maintain similar level of insurance cover N Y Y Y
Loss of cover type Y Y N Y
Changes in terms of cover N Y N Y
Potential loss of client ability to claim Y Y N Y
Lack of appreciation for cover until it is cancelled Y Y N Y
Inability to seek financial advice on potential changes to cover. Y Y N Y
Potential inability to obtain the same levels of cover if health
circumstances have changed.
Y Y N Y
Variability in premium rates Y Y N Y
Implication for Government Model 1 Model 2 Model 3 Model 4
Reduction in lost and inactive superannuation accounts Y Y Y Y
Development of policy and regulation to enable the consolidation Y Y Y Y
Potential increase in public welfare costs due to additional support for
members and affected families who lose ability to claim
Y N N N
Potential increased complaints to bodies such as SCT for loss of cover
due to prescribed transfers
Y N N Y
Potential requirement for Government-funded or mandated
compensation fund to assist members affected by mandated
consolidation
Y N N Y
Consider the need for trustee guidance and/or statutory indemnification
for trustees and insurers against complaints or losses due to prescribed
transfers
Y Y Y Y
Implication for Trustees and insurers Model 1 Model 2 Model 3 Model 4
Increase in complaints from members whose cover has changed Y Y Y Y
Cooperation between insurers, funds and trustees to devise acceptable
merger rules including:
- universal “transfer rules” to govern joint liability
- acceptable maximum limits
- access to relevant cover information for transferring members
- member communication
Y Y Y Y
Significant implementation and transition costs (e.g. contract alteration
and renegotiation, and member communications administration system
updates)
Y Y Y Y
Possibility of significant changes to member base (large increase or
decrease of members, different demographics) triggering potential
changes to premiums.
Y Y Y Y
Table 14. Implications of each automatic consolidation model

3.5. Level of impact arising from each model
We have reviewed the above implications and assessed the overall impacts and outcomes under each
model based on the following three key measures:
1. Achievement of the Government’s stated aim of reducing the number of unneeded
superannuation accounts.
2. Minimising the loss of insurance coverage for existing insured members.
3. Reducing the administration burden and cost of implementation for Trustees and insurers.
The results of this analysis are summarised below in Table 15. It is clear from this exercise that no model
will deliver optimal outcomes in all key measures.
However, we think it is critical to highlight all potential implications of any model, and to stimulate
discussion and development of an appropriate model.
In our view, the final model must be decided with a clear understanding of the potential impacts on
members and industry.
Impact on Model 1 Model 2 Model 3 Model 4
Government objective of account rationalisation* Low Low Med–High Med
Member insurance levels High Low–Med Low–Med Low
Implementation and administration complexity for Trustees
and insurers
Low High Med High
Table 15. Impact analysis of each automatic consolidation model

4. Conclusion
4.1. We all want to throw out the bathwater, but what about the baby?
Reducing the number of unnecessary superannuation accounts will deliver enormous benefits to members
– the most significant of which is the reduction of multiple account fees. And the most effective way to
eliminate accounts is by employing the same approach taken to establish them in the first place, via an
automatic, opt-out rule.
However, it is important to realise that because the vast majority of members are not engaged or
interested in their superannuation (which is the reason super accounts have proliferated in the first place),
any reduction achieved through such means will have been achieved without the informed consent of
members – notwithstanding any disclaimers or warnings provided to members during the process.
Given this practical reality, it is clear that there is significant risk of unintended collateral damage, such as
the impacts to the insurance coverage of members identified in our research. Unlike fees, insurance
coverage is not an unnecessary duplicate cost, instead providing financial protection and it constitutes a
valuable asset for many members.
In many cases where the multiplication of accounts has occurred, it may be that insurance coverage is
closer to a reasonable minimum level of coverage, particularly if you consider the well-documented life
insurance coverage gap that exists in Australia.
In addition, if coverage is lost, it may not be readily recoverable by members if their health or employment
circumstances have changed. Our review shows there are options that may achieve significant account
rationalisation while eliminating or minimising the impact to insurance coverage.
It is critical for all stakeholders to be aware of the impacts of this reform, and to actively consider the most
appropriate method, as well as any contract, communication, procedural or system change required to
facilitate. Stakeholders must also ensure that members are adequately informed, while Trustees and
insurers are properly guided (or protected from complaint or claims where they have complied with
mandated practice).
We agree with and support the goal of reducing the current numbers of superannuation accounts in
Australia, particularly as our projections show that at least 25% of those accounts could be eliminated
without impacting insurance coverage.
However, it is important to recognise that this oversupply situation has also resulted in widespread
insurance coverage – and any rationalisation initiative is likely to impact this. And while it is tempting to
discount these concerns by pointing out that members didn’t want or ask for this cover in the first place, we
feel such arguments fail to appreciate the nature of superannuation (very few people choose insurance
voluntarily but benefit nonetheless), and the very real impact on members who may be affected.
Our good intentions should not blind us to the human consequences of trying to stuff the genie back into
the bottle.

5. Appendices
5.1. Appendix 1 – Auto-consolidation account projections for the top 10 funds in each sector
Auto-consolidation account projections for the top 10 funds in each sector (by no. of members)1
- TABLE A
A B C D E F G H I J K L
Fund name Fund type
Number of members
(i.e. accounts)
('000)1
Total assets
($ million)1
Assumed %
excluded (e.g.
pension accts)
Assumed
contributory accts
Assumed % inactive
(>2yrs since cont.)
Projected no. of
inactive accts
Assumed % of
inactive accounts
with <$1,000 bal
Projected no. of
inactive accounts
with <$1,000 bal
Assumed % inactive
accounts with
<$10,000 bal
Projected no. of
inactive accounts
with <$10,000 bal
Data source/calculation APRA1
APRA1
APRA1
Assumption2
= E x F Assumption3 13
= G x H Assumption4
= I x H Assumption4
= K x H
Telstra Superannuation Scheme Corporate 101.2 10,541.6 6% 95.08 35% 33.28 45% 15.0 39% 13.0
Officers' Superannuation Fund Corporate 64.8 6,393.7 6% 60.88 35% 21.31 45% 9.6 39% 8.3
Westpac Staff Superannuation Plan Corporate 36.4 2,929.3 6% 34.20 35% 11.97 45% 5.4 39% 4.7
National Australia Bank Group Superannuation Fund A Corporate 33.3 2,971.5 6% 31.28 35% 10.95 45% 4.9 39% 4.3
Qantas Superannuation Plan Corporate 32.7 5,500.5 6% 30.77 35% 10.77 45% 4.8 39% 4.2
ANZ Australian Staff Superannuation Scheme Corporate 30.4 2,182.0 6% 28.58 28% 8.00 45% 3.6 39% 3.1
Rio Tinto Staff Superannuation Fund Corporate 27.3 2,804.0 6% 25.70 35% 9.00 45% 4.0 39% 3.5
BHP Billiton Superannuation Fund Corporate 19.4 2,284.5 6% 18.20 35% 6.37 45% 2.9 39% 2.5
Suncorp Staff Superannuation Plan Corporate 16.9 708.5 6% 15.89 35% 5.56 45% 2.5 39% 2.2
IBM Australia Limited Superannuation Fund # Corporate 14.5 1,530.6 6% 13.67 35% 4.78 45% 2.2 39% 1.9
Retail Employees Superannuation Trust Industry 1,932.4 18,206.4 6% 1816.48 40% 726.59 45% 327.0 39% 283.4
AustralianSuper Industry 1,501.7 32,957.8 6% 1411.58 36% 508.17 45% 228.7 39% 198.2
Sunsuper Superannuation Fund Industry 1,186.1 16,200.5 6% 1114.90 44% 490.56 45% 220.8 39% 191.3
HOSTPLUS Superannuation Fund Industry 938.8 7,942.2 6% 882.50 45% 397.12 45% 178.7 39% 154.9
Health Employees Superannuation Trust Australia Industry 706.6 15,710.1 6% 664.24 46% 305.55 45% 137.5 39% 119.2
Construction & Building Unions Superannuation Industry 582.6 14,462.0 6% 547.66 35% 191.68 45% 86.3 39% 74.8
Unisuper Industry 470.0 28,643.7 6% 441.85 48% 212.09 45% 95.4 39% 82.7
Professional Associations Superannuation Fund Industry 448.1 1,556.3 6% 421.20 65% 273.78 45% 123.2 39% 106.8
MTAA Superannuation Fund Industry 289.4 5,853.6 6% 272.00 42% 114.24 45% 51.4 39% 44.6
Victorian Superannuation Fund Industry 255.8 7,245.8 6% 240.42 46% 110.59 45% 49.8 39% 43.1
First State Superannuation Scheme Public Sector 538.2 19,133.6 6% 505.94 60% 303.57 45% 136.6 39% 118.4
State Public Sector Superannuation Scheme Public Sector 538.2 28,295.5 6% 505.89 31% 156.83 45% 70.6 39% 61.2
Public Sector Superannuation Scheme Public Sector 246.3 11,443.1 6% 231.49 31% 71.76 45% 32.3 39% 28.0
CSS Fund Public Sector 143.4 4,789.4 6% 134.84 60% 80.90 45% 36.4 39% 31.6
Military Superannuation & Benefits Fund No 1 Public Sector 138.6 3,260.3 6% 130.32 55% 71.68 45% 32.3 39% 28.0
Local Authorities Superannuation Fund Public Sector 107.2 3,938.7 6% 100.75 56% 56.42 45% 25.4 39% 22.0
Public Sector Superannuation Accumulation Plan Public Sector 97.8 2,049.1 6% 91.97 60% 55.18 45% 24.8 39% 21.5
Local Government Superannuation Scheme - Pool A Public Sector 90.7 2,847.4 6% 85.30 60% 51.18 45% 23.0 39% 20.0
Local Government Superannuation Scheme Public Sector 78.7 4,385.5 6% 73.98 60% 44.39 45% 20.0 39% 17.3
Australia Post Superannuation Scheme Public Sector 47.2 5,894.6 6% 44.35 60% 26.61 45% 12.0 39% 10.4
AMP Superannuation Savings Trust Retail 2,643.6 43,481.1 6% 2485.01 35% 869.75 45% 391.4 39% 339.2
The Universal Super Scheme Retail 1,226.9 30,734.4 6% 1153.27 35% 403.64 45% 181.6 39% 157.4
OnePath Masterfund Retail 984.6 25,526.0 6% 925.48 35% 323.92 45% 145.8 39% 126.3
Colonial First State FirstChoice Superannuation Trust Retail 620.9 35,395.1 6% 583.65 35% 204.28 45% 91.9 39% 79.7
Westpac Mastertrust - Superannuation Division Retail 397.9 5,407.1 6% 374.07 46% 172.07 45% 77.4 39% 67.1
ASGARD Independence Plan Division Two Retail 320.0 14,984.4 6% 300.77 35% 105.27 45% 47.4 39% 41.1
IOOF Portfolio Service Superannuation Fund Retail 298.1 9,248.0 6% 280.18 35% 98.06 45% 44.1 39% 38.2
Suncorp Master Trust Retail 254.7 5,317.4 6% 239.39 35% 83.79 45% 37.7 39% 32.7
Super Directions Fund Retail 234.5 2,660.4 6% 220.46 35% 77.16 45% 34.7 39% 30.1
Mercer Super Trust Retail 227.4 13,690.4 6% 213.80 44% 94.07 45% 42.3 39% 36.7
Advance Retirement Savings Account Retail - ERF 36.4 207.5 0% 36.43 100% 36.43 98% 35.7 2% 0.7
AMP Eligible Rollover Fund Retail - ERF 364.9 1,471.1 0% 364.92 100% 364.92 98% 357.6 2% 6.6
Australian Eligible Rollover Fund Retail - ERF 1,065.0 877.4 0% 1064.96 100% 1,064.96 98% 1043.7 2% 19.2
Australia's Unclaimed Super Fund Retail - ERF 1,947.1 564.1 0% 1947.14 100% 1,947.14 98% 1908.2 2% 35.0
National Preservation Trust Retail - ERF 597.3 346.8 0% 597.30 100% 597.30 98% 585.4 2% 10.8
SuperTrace Eligible Rollover Fund Retail - ERF 1,416.1 1,601.9 0% 1416.10 100% 1,416.10 98% 1387.8 2% 25.5
23,350.2 464,174.7 2.4 22,274.8 22.9 12,229.7 23.9 8,379.6 15.7 2,750.8
CORPORATEINDUSTRYPUBLICSECTORRETAILRETAIL-ERF

5.2. Appendix 2 – Insurance projections for the top 10 funds in each sector
Auto-consolidation insurance projections for the top 10 funds in each sector (by no. of members)
1
- TABLE B
O P Q R S T V W X Z
Fund name Fund type
Cover continues if
inactive?
Time limit for cover
whilst inactive?
Account balance
limit?
Default cover
amount (age 39) Default cover type
Projected no. of
insured accounts
(inactive & <$1,000
bal)
Projected no. of
insured accounts
(inactive & <$10,000
bal)
Average death or
DTPD insurance
amount (based on
age 39 default
cover amount &
where cover is
provided)
RW6
RW6
RW6
RW6
RW6
Assumption5
(to J) Assumption5
(to L) T8
Telstra Superannuation Scheme Corporate Yes No Unknown 229,256.6 DTPD 14.7 12.7 229,257
Officers' Superannuation Fund Corporate Yes No No 269,713.6 DTPD 9.4 8.1 269,714
Westpac Staff Superannuation Plan Corporate No N/A N/A N/A N/A 0.1 0.1 0
National Australia Bank Group Superannuation Fund A Corporate No N/A N/A N/A N/A 0.1 0.1 269,714
Qantas Superannuation Plan Corporate Yes No No DTPD 4.7 4.1 0
ANZ Australian Staff Superannuation Scheme # Corporate Yes No 7,500.0 Unknown Death 3.5 3.1
Rio Tinto Staff Superannuation Fund Corporate No N/A N/A N/A N/A 0.1 0.1 0
BHP Billiton Superannuation Fund Corporate No N/A N/A N/A N/A 0.1 0.0 0
Suncorp Staff Superannuation Plan Corporate No N/A N/A N/A N/A 0.1 0.0 0
IBM Australia Limited Superannuation Fund # Corporate No N/A N/A N/A N/A 0.0 0.0 0
Retail Employees Superannuation Trust Industry Yes No 1,200.0 232,000 DTPD 320.4 277.7 232,000
AustralianSuper Industry Yes 13m 1,000.0 132,900 DTPD 224.1 194.2 132,900
Sunsuper Superannuation Fund Industry Yes No 1,500.0 197,000 Death 216.3 187.5 197,000
HOSTPLUS Superannuation Fund Industry Yes No No 232,132 Death 175.1 151.8 232,132
Health Employees Superannuation Trust Australia Industry Yes No No 140,600 DTPD 134.7 116.8 140,600
Construction & Building Unions Superannuation Industry Yes No 1,200.0 200,000 DTPD 84.5 73.3 200,000
Unisuper Industry Yes No 2,000.0 164,000 Death 93.5 81.1 164,000
Professional Associations Superannuation Fund Industry Unknown 2.5 2.1
MTAA Superannuation Fund Industry Yes No No 102,300 DTPD 50.4 43.7 102,300
Victorian Superannuation Fund Industry Yes No No 408,000 DTPD 48.8 42.3 408,000
First State Superannuation Scheme Public Sector Yes No No 336,222 Death 133.9 116.0 336,222
State Public Sector Superannuation Scheme Public Sector Unknown 1.4 1.2
Public Sector Superannuation Scheme Public Sector Unknown 0.6 0.6
CSS Fund Public Sector Unknown 0.7 0.6
Military Superannuation & Benefits Fund No 1 Public Sector Unknown 0.6 0.6
Local Authorities Superannuation Fund Public Sector Yes No No 253,500 DTPD 24.9 21.6 253,500
Public Sector Superannuation Accumulation Plan Public Sector No N/A N/A N/A N/A 0.5 0.4 0
Local Government Superannuation Scheme - Pool A Public Sector Yes No No 302,100 DTPD 22.6 19.6 302,100
Local Government Superannuation Scheme Public Sector Yes No No Unknown 19.6 17.0
Australia Post Superannuation Scheme Public Sector Unknown 0.2 0.2 0
AMP Superannuation Savings Trust Retail Yes No No 200,000 DTPD 383.6 332.4 200,000
The Universal Super Scheme Retail Yes No No Employer selected 178.0 154.3
OnePath Masterfund Retail Yes No No 108,800 DTPD 142.8 123.8 108,800
Colonial First State FirstChoice Superannuation Trust Retail Yes No No Employer selected 90.1 78.1
Westpac Mastertrust - Superannuation Division Retail Yes No No Employer selected 75.9 65.8
ASGARD Independence Plan Division Two Retail Yes No No Employer selected 46.4 40.2
IOOF Portfolio Service Superannuation Fund Retail Yes No No 55,914 DTPD 43.2 37.5 55,914
Suncorp Master Trust Retail Yes No No 26,222 DTPD 36.9 32.0 26,222
Super Directions Fund # Retail Yes No No Employer selected 34.0 29.5
Mercer Super Trust Retail Unknown 0.8 0.7
Advance Retirement Savings Account7
Retail - ERF Yes Unknown Unknown Member selected 0.7 0.0
AMP Eligible Rollover Fund Retail - ERF N/A N/A N/A N/A N/A 0.0 0.0 0
Australian Eligible Rollover Fund Retail - ERF N/A N/A N/A N/A N/A 0.0 0.0 0
Australia's Unclaimed Super Fund Retail - ERF N/A N/A N/A N/A N/A 0.0 0.0 0
National Preservation Trust Retail - ERF N/A N/A N/A N/A N/A 0.0 0.0 0
SuperTrace Eligible Rollover Fund Retail - ERF N/A N/A N/A N/A N/A 0.0 0.0 0
CORPORATEINDUSTRYPUBLICSECTORRETAILRETAIL-ERF

5.3. Appendix 3 – Insurance projections for the top 10 funds in each sector for each auto-consolidation model
Auto-consolidation insurance projections for the top 10 funds in each sector (by no. of members)
1
- TABLE C
O P EE FF GG HH II JJ KK LL MM NN OO PP QQ RR SS TT
Fund name Fund type
Model 1 outcome -
<$1,000 (accounts
retained)10
Model 1 outcome
<$1,000 (insured
accounts
cancelled)
Model 1 outcome -
<$10,000 (accounts
retained)10
Model 1 outcome
<$10,000 (insured
accounts
cancelled)
Model 2 outcome -
<$1,000 (accounts
retained)10
Model 2 outcome
<$1,000 (insured
accounts
cancelled)
Model 2 outcome -
<$10,000 (accounts
retained)10
Model 2 outcome
<$10,000 (insured
accounts
cancelled)
Model 3 outcome -
<$1,000 (accounts
retained)10
Model 3 outcome
<$1,000 (insured
accounts
cancelled)
Model 3 outcome -
<$10,000 (accounts
retained)10
Model 3 outcome
<$10,000 (insured
accounts
cancelled)
Model 4 outcome12
-
<$1,000 (accounts
retained)10
Model 4 outcome12
<$1,000 (insured
accounts
cancelled)
Model 4 outcome12
-
<$10,000 (accounts
retained)10
Model 4 outcome12
<$10,000 (insured
accounts
cancelled)
= 2% x J
= (J - EE) x 98%
[ERF=2%] =2% x L
= (L - GG) x 98%
[ERF=2%] = 2% x J = 011
=2% x L = 011
= 98% x J [ERF=2%] = 011
= 98% x L [ERF=2%] = 011
= 30% x 98% x J = (J - QQ) x 98% = 30% x 98% x L = (L - SS) x 98%
Telstra Superannuation Scheme Corporate 0.30 14.4 0.3 12.5 0.3 0.0 0.3 0.0 14.7 0.0 12.7 0.0 4.4 10.4 3.8 9.0
Officers' Superannuation Fund Corporate 0.19 9.2 0.2 8.0 0.2 0.0 0.2 0.0 9.4 0.0 8.1 0.0 2.8 6.6 2.4 5.7
Westpac Staff Superannuation Plan Corporate 0.11 0.0 0.1 0.0 0.1 0.0 0.1 0.0 5.3 0.0 4.6 0.0 1.6 0.0 1.4 0.0
National Australia Bank Group Superannuation Fund A Corporate 0.10 0.0 0.1 0.0 0.1 0.0 0.1 0.0 4.8 0.0 4.2 0.0 1.4 0.0 1.3 0.0
Qantas Superannuation Plan Corporate 0.10 4.7 0.1 4.0 0.1 0.0 0.1 0.0 4.7 0.0 4.1 0.0 1.4 3.4 1.2 2.9
ANZ Australian Staff Superannuation Scheme # Corporate 0.07 3.5 0.1 3.0 0.1 0.0 0.1 0.0 3.5 0.0 3.1 0.0 1.1 2.5 0.9 2.2
Rio Tinto Staff Superannuation Fund Corporate 0.08 0.0 0.1 0.0 0.1 0.0 0.1 0.0 4.0 0.0 3.4 0.0 1.2 0.0 1.0 0.0
BHP Billiton Superannuation Fund Corporate 0.06 0.0 0.0 0.0 0.1 0.0 0.0 0.0 2.8 0.0 2.4 0.0 0.8 0.0 0.7 0.0
Suncorp Staff Superannuation Plan Corporate 0.05 0.0 0.0 0.0 0.1 0.0 0.0 0.0 2.5 0.0 2.1 0.0 0.7 0.0 0.6 0.0
IBM Australia Limited Superannuation Fund # Corporate 0.04 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.1 0.0 1.8 0.0 0.6 0.0 0.5 0.0
Retail Employees Superannuation Trust Industry 6.54 314.0 5.7 272.1 6.5 0.0 5.7 0.0 320.4 0.0 277.7 0.0 96.1 226.2 83.3 196.1
AustralianSuper Industry 4.57 219.6 4.0 190.3 4.6 0.0 4.0 0.0 224.1 0.0 194.2 0.0 67.2 158.2 58.3 137.1
Sunsuper Superannuation Fund Industry 4.42 212.0 3.8 183.7 4.4 0.0 3.8 0.0 216.3 0.0 187.5 0.0 64.9 152.7 56.2 132.4
HOSTPLUS Superannuation Fund Industry 3.57 171.6 3.1 148.7 3.6 0.0 3.1 0.0 175.1 0.0 151.8 0.0 52.5 123.6 45.5 107.2
Health Employees Superannuation Trust Australia Industry 2.75 132.1 2.4 114.4 2.7 0.0 2.4 0.0 134.7 0.0 116.8 0.0 40.4 95.1 35.0 82.4
Construction & Building Unions Superannuation Industry 1.73 82.8 1.5 71.8 1.7 0.0 1.5 0.0 84.5 0.0 73.3 0.0 25.4 59.7 22.0 51.7
Unisuper Industry 1.91 91.7 1.7 79.4 1.9 0.0 1.7 0.0 93.5 0.0 81.1 0.0 28.1 66.0 24.3 57.2
Professional Associations Superannuation Fund Industry 2.46 118.3 2.1 102.5 2.5 0.0 2.1 0.0 120.7 0.0 104.6 0.0 36.2 85.2 31.4 73.9
MTAA Superannuation Fund Industry 1.03 49.4 0.9 42.8 1.0 0.0 0.9 0.0 50.4 0.0 43.7 0.0 15.1 35.6 13.1 30.8
Victorian Superannuation Fund Industry 1.00 47.8 0.9 41.4 1.0 0.0 0.9 0.0 48.8 0.0 42.3 0.0 14.6 34.4 12.7 29.8
First State Superannuation Scheme Public Sector 2.73 131.2 2.4 113.7 2.7 0.0 2.4 0.0 133.9 0.0 116.0 0.0 40.2 94.5 34.8 81.9
State Public Sector Superannuation Scheme Public Sector 1.41 67.8 1.2 58.7 1.4 0.0 1.2 0.0 69.2 0.0 59.9 0.0 20.7 48.8 18.0 42.3
Public Sector Superannuation Scheme Public Sector 0.65 31.0 0.6 26.9 0.6 0.0 0.6 0.0 31.6 0.0 27.4 0.0 9.5 22.3 8.2 19.4
CSS Fund Public Sector 0.73 35.0 0.6 30.3 0.7 0.0 0.6 0.0 35.7 0.0 30.9 0.0 10.7 25.2 9.3 21.8
Military Superannuation & Benefits Fund No 1 Public Sector 0.65 31.0 0.6 26.8 0.6 0.0 0.6 0.0 31.6 0.0 27.4 0.0 9.5 22.3 8.2 19.3
Local Authorities Superannuation Fund Public Sector 0.51 24.4 0.4 21.1 0.5 0.0 0.4 0.0 24.9 0.0 21.6 0.0 7.5 17.6 6.5 15.2
Public Sector Superannuation Accumulation Plan Public Sector 0.50 0.0 0.4 0.0 0.5 0.0 0.4 0.0 24.3 0.0 21.1 0.0 7.3 0.0 6.3 0.0
Local Government Superannuation Scheme - Pool A Public Sector 0.46 22.1 0.4 19.2 0.5 0.0 0.4 0.0 22.6 0.0 19.6 0.0 6.8 15.9 5.9 13.8
Local Government Superannuation Scheme Public Sector 0.40 19.2 0.3 16.6 0.4 0.0 0.3 0.0 19.6 0.0 17.0 0.0 5.9 13.8 5.1 12.0
Australia Post Superannuation Scheme Public Sector 0.24 11.5 0.2 10.0 0.2 0.0 0.2 0.0 11.7 0.0 10.2 0.0 3.5 8.3 3.1 7.2
AMP Superannuation Savings Trust Retail 7.83 375.9 6.8 325.8 7.8 0.0 6.8 0.0 383.6 0.0 332.4 0.0 115.1 270.8 99.7 234.7
The Universal Super Scheme Retail 3.63 174.4 3.1 151.2 3.6 0.0 3.1 0.0 178.0 0.0 154.3 0.0 53.4 125.7 46.3 108.9
OnePath Masterfund Retail 2.92 140.0 2.5 121.3 2.9 0.0 2.5 0.0 142.8 0.0 123.8 0.0 42.9 100.9 37.1 87.4
Colonial First State FirstChoice Superannuation Trust Retail 1.84 88.3 1.6 76.5 1.8 0.0 1.6 0.0 90.1 0.0 78.1 0.0 27.0 63.6 23.4 55.1
Westpac Mastertrust - Superannuation Division Retail 1.55 74.4 1.3 64.5 1.5 0.0 1.3 0.0 75.9 0.0 65.8 0.0 22.8 53.6 19.7 46.4
ASGARD Independence Plan Division Two Retail 0.95 45.5 0.8 39.4 0.9 0.0 0.8 0.0 46.4 0.0 40.2 0.0 13.9 32.8 12.1 28.4
IOOF Portfolio Service Superannuation Fund Retail 0.88 42.4 0.8 36.7 0.9 0.0 0.8 0.0 43.2 0.0 37.5 0.0 13.0 30.5 11.2 26.5
Suncorp Master Trust Retail 0.75 36.2 0.7 31.4 0.8 0.0 0.7 0.0 36.9 0.0 32.0 0.0 11.1 26.1 9.6 22.6
Super Directions Fund # Retail 0.69 33.3 0.6 28.9 0.7 0.0 0.6 0.0 34.0 0.0 29.5 0.0 10.2 24.0 8.8 20.8
Mercer Super Trust Retail 0.85 40.7 0.7 35.2 0.8 0.0 0.7 0.0 41.5 0.0 36.0 0.0 12.4 29.3 10.8 25.4
Advance Retirement Savings Account7
Retail - ERF 0.71 0.7 0.0 0.0 0.7 0.0 0.0 0.0 0.7 0.0 0.0 0.0 0.2 0.7 0.0 0.0
AMP Eligible Rollover Fund Retail - ERF 7.15 0.0 0.1 0.0 7.2 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Australian Eligible Rollover Fund Retail - ERF 20.87 0.0 0.4 0.0 20.9 0.0 0.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Australia's Unclaimed Super Fund Retail - ERF 38.16 0.0 0.7 0.0 38.2 0.0 0.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
National Preservation Trust Retail - ERF 11.71 0.0 0.2 0.0 11.7 0.0 0.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
SuperTrace Eligible Rollover Fund Retail - ERF 27.76 0.0 0.5 0.0 27.8 0.0 0.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
167.59 2,895.91 55.02 2,509.19 167.59 0.00 55.02 0.00 3,000.79 0.00 2,600.08 0.00 900.24 2,086.44 780.02 1,807.65
INDUSTRYPUBLICSECTORRETAILRETAIL-ERFCORPORATE
Sources and notes for Tables A, B & C:
1
Superannuation Fund-level Rates of Return , APRA, June 2011 (Issued 27 January 2011)
2
Based on publicly available information for selected funds
3
Consolidation of superannuation accounts report prepared for CHOICE, Rice Warner Actuaries, Hattingh et al., November 2006 & TAL estimates based on client-sourced data
4
TAL estimates based on client-sourced data
5
Assumes 98% coverage rate where cover continues for inactive members; 2% coverage rate where cover doesn't continue for inactive members (TAL estimates)
6
Information sourced from Rice Warner Group Insurance Comparator as at February 2012 & public domain
7
Assumes 2% coverage rate given cover does not appear to be default
8
Given cover levels generally fluctuate with age, this figure is purely indicative.
9
Based on Average Weekly Earnings, Full-time, ABS, of $1,296.70 <
http://www.abs.gov.au/ausstats/abs@.nsf/mf/6302.0>
10
Assumes that 2% of people will actively retain their account in an "opt-out" situation, and that 98% of people who don't opt-out will have default insurance. ERFs assumption as to coverage is 2%
11
No insurance would be lost under this model given cover is proposed to be merged into the new fund
12
Based on death cover and a "nominal insurance amount" of $100,000. Assumed that 30% of accounts with the default level of cover will have cover <$100,000 based on a review of major default
13
Some inactive information is sourced from Superratings SMART report, 25/2/2012 1:08 PM (figures are bold where used)
14
Annual Superannuation Bulletin , APRA, June 2010

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