Superannuation funds lashed as Aussie waits over 500 days for $100,000 death benefit payout: ‘Distressing'

Yahoo

31-03-2025

Australia's corporate watchdog has blasted superannuation funds for widespread failings in handling death benefit claims. In one 'distressing' case, a super fund took more than a year to pay a death benefit of $100,000 to a First Nations woman grieving the loss of her husband.
The Australian Securities and Investment Commission (ASIC) has called on superannuation funds to overhaul the way they deal with death benefit claims. Its landmark report identified a range of problems, including excessive delays, poor customer service and ineffective claims handling.
The watchdog investigated 10 super funds, who are responsible for 38 per cent of all member benefits including Australian Retirement Trust, HESTA, Hostplus, Rest and UniSuper, over a two-year period. It comes after it launched legal action against AustralianSuper and Cbus over their handling of death and disability claims, who were excluded from the review.
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ASIC chairman Joe Longo said some funds performed better than others but 'tellingly none of the reviewed trustees monitored or reported on their end-to-end claims handling times or performance'.
'At the heart of this issue is leadership that doesn't have a grip on the fund's data, systems and processes – and ultimately it is the customers who suffer for it,' he said.
'This kind of disconnect is unacceptable in any area of corporate Australia, but in the superannuation sector it is particularly serious, because super affects everyone from the boardroom to the living room.'
ASIC has handed down 34 recommendations to super trustees, including ones to improve customer service and response times, monitoring and reporting on claims handling timeframes, streamlined processes and procedures, and better guidance and training for staff.ASIC found some super trustees showed good handling practices, while others had systemic failures which meant grieving Aussies faced added and unnecessary distress after the death of their loved ones.
The review found a huge variation in claims handling times across super funds, with the fastest closing 48 per cent of death benefit claims in 90 days and the slowest just 8 per cent in the same time period.
Of the claims reviewed by ASIC, 78 per cent had delays caused by processing issues within the trustee's control.
There were also instances of poor customer service in 27 per cent of files, with phone calls not returned, queries dismissed and claimants asked for unreasonable information.
ASIC commissioner Simone Constant said many of the complaints read by the watchdog were 'distressing'.
'We saw deep grief, vulnerability, frustration and genuine suffering,' she said.
In one case, a trustee took more than 500 days to pay a death benefit of around $100,000 to a First Nations woman grieving the loss of her husband.
The trustee failed to respond to her concerns about financial hardship and did not support her when she struggled to navigate the claims process and understand how to complete claim forms.
'The money from a death benefit can make a huge difference and each day a trustee delays that payment causes real harm to families,' Constant said.
'Trustees need to do better.'
First Nations advocates are calling on the government to commit to legislating mandatory customer service standards in superannuation, something which Finance Services Minister Stephen Jones flagged earlier this year.
Mark Holden, Mob Strong Debt Help Senior Solicitor and Policy Advocate, said this was a 'critical' moment for the superannuation industry.
'Super funds do a great job collecting our money, but let us down when it matters most - when we've lost someone, when we're grieving, and when we need access,' he said.
Super Consumer Australia is also calling on the government to urgently introduce mandatory service standards.
CEO Xavier O'Halloran said the report confirmed what he had been hearing from families in crisis.
'Super funds are blind to their own failures, with no targets, no monitoring, and no accountability,' he said.Sign in to access your portfolio