Finance Your Super Superannuation insurance is vital as workers compensation is not enough

Superannuation insurance is vital as workers compensation is not enough

Super insurance
Insurance in superannuation is vital to protect members with injuries. Photo: Getty
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It is deeply concerning that amidst the much-needed current focus on Australia’s superannuation sector, a high-profile Melbourne ‘think tank’ continues to misrepresent the basic facts relating to default superannuation insurance.

For the second time in just a few months, the Grattan Institute has claimed Australians don’t need group insurance through super because workers are “pretty comprehensively” insured against accidents at work through their state based workers’ compensation schemes.

This ill-informed argument significantly overlooks a key fact: that many people seeking to make a total and permanent disablement (TPD) claim through their superannuation are not injured or do not suffer an illness as a result of work.

Those who work with injured people in the real world know the majority of people making TPD insurance claims are not accessing a workers compensation scheme. In fact, in our experience with thousands of our own clients, seven in ten people who access their TPD insurance are injured in circumstances entirely unrelated to work.

Workers comp varies

We also know that for those who have sustained their injures at work that workers compensation schemes vary greatly from state to state, and many are inadequate in their long term support for injured workers. Some jurisdictions remove workers from the compensation scheme after two years, while others offer ongoing support.

Some jurisdictions have even effectively removed the right to pursue common law damages by creating exceptionally high injury thresholds. Essentially, someone injured at work’s financial future depends on the luck of which state they were injured in.

Default insurance through superannuation plays a key role in helping to close the insurance gap for thousands of Australians – it provides cover to workers who otherwise may have no life or disability insurance at all, for roughly the cost of a cup of coffee per week. It is a vital safety net in ensuring anyone with super has insurance, something that is critical given we have an under insurance problem in Australia.

Irresponsible to ignore workers’ risks

To continue to argue in light of these facts that state workers’ compensation schemes are more than enough cover for anyone needing to make a TPD claim is misinformed at best and grossly irresponsible at worst.

It is vital that we do not rely on misinformation when redesigning the superannuation system for Australia’s future, but rather look to the lived experience of injured people when making laws.

In our day to day work, we not only see the enormous dislocating impact that an unexpected injury or illness has on someone professionally, socially, mentally and physically, we also see the colossal financial impact.

It can mean the loss of family homes, of life savings, and even of day-to-day necessities. No matter what the circumstances are – and even if a workers’ compensation scheme provides some contribution – TPD insurance is vital to maintaining the dignity of working Australians. Everyday Australians deserve nothing less.

Kim Shaw is a Principal in Superannuation and Insurance at Maurice Blackburn Lawyers.

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