The Protecting Your Super (PYS) package took effect from 1 July 2019, introducing significant changes to how superannuation funds handle inactive accounts, insurance, and exit fees. The reforms aimed to stop account balances being eroded by unnecessary fees and insurance premiums.
What Did Protecting Your Super Change?
1. Insurance on inactive accounts — opt-in required
Prior to PYS, many Australians unknowingly paid insurance premiums on old, inactive super accounts they’d forgotten about. From 1 July 2019:
- Low-balance accounts (under $6,000) that are inactive for 16 consecutive months can no longer charge insurance premiums unless the member has opted in
- Members under 25 are no longer given automatic default insurance unless they opt in
- Accounts inactive for 16 months without a balance above $6,000 must have insurance cancelled (unless the member has actively elected to keep it)
2. Account consolidation — ATO-initiated transfer
Accounts with a balance under $6,000 that have been inactive for 16 months must be transferred to the ATO as “unclaimed super money” — unless the member opts to keep the account open.
The ATO then proactively matches these transferred balances against active super accounts and rolls the money into the member’s active fund (or holds it until claimed via myGov).
3. Exit fees — abolished
From 1 July 2019, exit fees (fees charged when transferring or rolling over your super to another fund) were abolished. Funds can no longer charge members for leaving.
4. Fees capped for low balances
Administration and investment fees on accounts with balances under $6,000 are capped at 3% per year. This prevents small accounts being slowly consumed by fees.
Why Were These Reforms Introduced?
The Productivity Commission’s 2018 inquiry into superannuation found that:
- Australians held 10 million unintended multiple super accounts, costing $2.6 billion/year in unnecessary fees
- Many members had their retirement savings eroded by default insurance premiums they were unaware of
- Young and low-income workers were disproportionately affected
PYS directly addressed these issues.
What Does PYS Mean for You Today?
If you haven’t interacted with a super account for 16+ months and the balance is under $6,000, your insurance may have been cancelled and your balance may have been transferred to the ATO.
To check for transferred balances:
- Log in to myGov → ATO online services → Super
- Look for “ATO-held super” amounts
- These can be claimed or transferred to your active fund at any time
The Subsequent Reforms: Your Future, Your Super (2021)
The Your Future, Your Super (YFYS) reforms built on PYS from 2021:
- Introduced the annual performance test — underperforming MySuper products must notify members
- Introduced stapling — new employees are automatically linked to their existing super fund rather than a new default being created
See Your Future, Your Super Reforms.
Frequently Asked Questions
My insurance was cancelled under PYS. Can I get it back? Possibly — contact your fund. Some funds allow reinstatement of cancelled cover, but this may be subject to underwriting (i.e., health questions). If you have a new health condition, reinstating cancelled cover could be problematic.
I found ATO-held super. How do I claim it? Log in to myGov → ATO online → Super → ATO-held super. You can transfer it to your active fund in a few steps.
Are exit fees gone permanently? Yes — exit fees on superannuation accounts have been legislatively prohibited since 1 July 2019. Any fund charging an exit fee is in breach of the law.
For more: Your Future, Your Super Reforms, Lost and Unclaimed Super, Insurance in Super. For advice on your situation, speak with a licensed financial adviser via MoneySmart.