Cbus calls for parliament to reject superannuation reforms on fear of insurance shortfalls

Cbus CEO Justin Arter is concerned many workers may be without coverage in the wake of the changes to superannuation.

Cbus has warned the reforms under the YourSuper Your Future banner risked leaving many high rise high risk workers without insurance coverage. Picture: Tricia Watkinson

Industry super fund Cbus has weighed in to the fracas around the government‘s flagship reforms to superannuation, calling on the parliament to reject the bill warning the plan to staple funds risks creating an insurance shortfall.

The industry fund, which represents many workers in construction, has warned the reforms under the YourSuper Your Future banner risked leaving many high rise high-risk workers without insurance coverage.

Cbus said the stapling scheme will likely see many young workers who joined the building and construction industry likely to retain earlier funds which do not provide coverage under the dangerous occupation exception.

Workers under 25 are currently able to keep their automatic entitlement to insurance via the dangerous occupation exception thanks to an amendment put in place last year.

The insurer said it had paid 58 claims totally $7,256,200 to members who would not have received any coverage if the amendment had not been passed.

Cbus said dangerous occupation exception currently in place had allowed almost 115,800 building and construction workers coverage.

The super fund warned many funds contain exclusions or unfavourable terms because insurance offered through them did not cover hazardous industries.

Cbus CEO Justin Arter said it was concerning many workers may find themselves without coverage in the wake of the changes to superannuation.

“If a construction worker is ‘stapled’ to a fund they joined at their first job, they could be paying for insurance that won’t cover them if they’re seriously injured,” he said.

“Many Cbus insurance claims are from workers in their first year on the building site when they are new to the industry and at higher risk.”

Mr Arter called on the parliament to reject the Your Future Your Super bill.

“The recent hearings exposed that the issues with it are too many, and far too serious to be resolved via tinkering. If passed, it could leave 2.7 million people – 20% of our working population – who work in hazardous occupations worse off,” he said.

Maurice Blackburn superannuation principal lawyer Josh Mennen said there was significant risk of unintended consequences if someone who started working in hospitality went to work in construction but retained their old superannuation account and the insurance associated with it.

“They’re likely to be dramatically underinsured if they’ve got the default account,” he said.

Mr Mennen called for “guardrails” to ensure that if the government did proceed with stapling super accounts they needed to ensure worker’s insurance coverage did not leave them worst off.

“It’s really an argument that people’s super fund should be bespoke for their particular demographics other than a one-size-fits-all homogenous fund system for one first job,” he said.