I have most of my retirement savings invested in our SMSF, as the annual $1K admin fee is quite modest when shared across the three member accounts, and works out to be only about 0.05% of the total SMSF balance pa. And we are mostly invested in a couple of Vanguard low fee funds, so the overall investment management fees average around 0.3%pa. Bur we don't have any life or TPD insurance via our SMSF.
On the other hand, my employer's default superannuation offering provides a refund of a large portion of the standard retail admin fees (so is quite a low cost offering) and also rebates the fees charged for the default amount of life and total and permanent disability insurance, which is why I retained this superannuation account to receive the SGL contributions when I 'rolled over' the bulk of my retirement savings into our SMSF.
Being effectively 'free' life and TPD insurance I wasn't too concerned about the amount of cover provided, especially as with having no home mortgage and with DS2 about to complete high school I can afford to 'self insure' to all intents and purposes. But the 'free' life insurance was still a nice perk from my employer.
Previously the insurance offering cost the company a fixed amount (based on salary) per insured member, and the cover provided was a fixed number of 'units' of insurance. The amount of cover provided per 'unit' decreased with age -- so younger members had a lot more insurance cover than older members, for the same cost per employee. Basically you received 15% of salary x number of years until age 65 (so I would have no insurance cover from age 65 onwards).
The insurance offering was recently revamped, with rates lowered overall, and also a major change in how the amount of cover was calculated. The new offering provides a fixed multiple (3x) of annual salary as the amount of life insurance and TPD insurance provided, and the employer is charged a different amount per $1,000 of cover, depending on the age of the insured life.
In my case, at age 62, my previous amount of life and TPD insurance cover was only $40,608 and would have dropped to $0 by age 65. The new insurance cover will be $336,072 and remain a constant 3x salary until I retire (perhaps at age 70). The cost (to my employer) of the new insurance is $1,770 pa, compared to roughly $500pa under the old insurance plan. The cost per $1,000 of cover rapidly increases with age, so by age 65 the cost will have risen to $2,129pa.
From age 65 onwards there will no longer by any TPD cover provided, but death cover will remain until age 75 (for as long as I am still employed).
The only downsides to this new insurance arrangement I can see are:
1. Life insurance is really of no material benefit to me (DW would receive a larger insurance payout if I die), although getting a larger TPD benefit if I suffer a major, permanent health 'event' (such as a stroke, heart attack of terminal illness that prevents any return to work) would be of benefit -- and means I don't have to think about taking out expensive trauma insurance.
2. The rapidly rising cost for older members means that there is yet another incentive for the company to focus any 'downsizing' (or redundancy) packages towards older employees. Then again, at my age a redundancy package would be almost of the same financial value as continuing to work until my planned retirement age. So I'm not too concerned about that aspect of the changes.
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