Covid cover is jeopardised by lax employers

Tuesday June 02, 2020 Written by Published in Economy
Nurse Parau Nio is at the cutting edge of Covid-19 precautions. TE MARAE ORA 20051108 Nurse Parau Nio is at the cutting edge of Covid-19 precautions. TE MARAE ORA 20051108

The Super Fund is in talks with government to crack down on employers defaulting on their contributions and premiums.

The National Super Fund’s life insurance policy now covers death from the Covid-19 coronavirus.

The families of anyone who dies will receive one year of that person’s salary, and their contributions from the Cook Islands National Superannuation Fund.

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However Fund chief executive Damien Beddoes warns that the pay-out relies on the member and their employer having kept up their contributions to the super fund.

And despite receiving the government wage subsidy, a significant number of companies are still defaulting on their super contributions – which is illegal.

“We are in discussions with government regarding employers that have received subsidy but not paid contributions,” Beddoes said.

If the Fund does not receive contributions for successive six months, member will lose their life insurance cover, Beddoes said. Once the contribution resumes, the benefit will be reinstated.

He said the Covid-19 cover would reassure people. “People are concerned and unsure about this Covid-19.

“Thankfully the data that is coming back is informing and changing a lot of the views on this virus. It is potentially not as bad, based on actual death rates from the stats, but knowing that at least our insurance covers is a reassuring factor for our members.”

While the Covid-19 crisis has affected businesses around the island, Beddoes is urging employers to continue contributing to the super fund.

He said calls to reduce super contributions to zero could result in members missing out on the insurance benefit.

The government has reduced contributions from five per cent to three and it is set to reduce further to one per cent from July.

Beddoes confirmed the wage subsidy government pays to the employers includes the superannuation and tax contributions.

“The issue that we have is some employers prior to the government subsidy had not been making payments.

“When the subsidy started, they received the subsidy but have not made the contributions so the employees that are working for them will be approaching the six month period of no contributions which means they will no longer be entitled to this insurance benefit.

“Most of the employers are playing by the rulse, they are receiving subsidy and making regular contributions but there are a couple who are not.”

According to the national superannuation policy, when a member joins the fund and starts contributing, they are automatically covered for life insurance to the value of one year’s salary even if they have pre-existing medical condition. The pay-out will also include their total contributions, including the contributions from the employers.

Beddoes said the one year’s salary would be calculated based on the contributions made by the members.

They had paid out “millions of dollars” in insurance claims over the years, he said. In the April 2020 quarter, Beddoes said the super fund paid out $925,000 in benefits.

Those who have total impairment disability and cannot work due to that, diagnosed with terminal illness with limited time to live or have “passed away suddenly” are entitled to insurance pay out.

Cook Islands National Superannuation Fund uses Mercer Marsh Benefits as brokerage and the underlying policy is with AIA.

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