A key pillar of financial security in Australia is now under scrutiny for troubling reasons.

Recent revelations have prompted a public apology over long-standing issues that have added stress to those already facing difficult times.

The impact has been significant, leaving many frustrated and vulnerable. As affected individuals share their experiences, calls for urgent reform are growing.

The Australian Securities and Investments Commission (ASIC) has unveiled a landmark report on death benefit claims handling.

The report scrutinised the practices of 10 trustees, including Australian Retirement Trust, Avanteos, Brighter Super, Commonwealth Superannuation Corporation, HESTA, Hostplus, NM Super, Nulis, Rest, and UniSuper.

These trustees represent a significant 38 per cent of all member benefits in the superannuation sector, which, as of September 2024, is valued at a staggering $4.1 trillion.

Systemic failures in handling death benefit claims were revealed, adding distress to grieving Australians. Credit: BankPhotos / iStock

The report's findings are nothing short of alarming. Not a single trustee had adequate measures to monitor or report the time taken to handle claims or their performance.

This lack of oversight has had real-world consequences, with 78 per cent of claims reviewed over the two years to 31 March 2024 experiencing delays due to processing issues within the trustees' control.

The impact was even more pronounced for members living in First Nations postcodes, who faced even greater delays.

The report paints a picture of an industry plagued by inefficiency and insensitivity.

A shocking 27 per cent of claims were met with poor customer service, including unreturned phone calls, dismissed queries, and claimants being asked for unreasonable information.

ASIC Commissioner Simone Constant described the complaints as distressing, highlighting the deep grief and genuine suffering experienced by claimants.

One particularly egregious case involved a trustee taking over 500 days to process a $100,000 death benefit claim for a widow, who, at the time of the report, still had not received the payment.

The trustee's failure to respond to her financial hardship and lack of support through the claims process was a stark example of the deficiencies within the system.

Another case involved a widow whose husband had passed away from cancer.

She received the $600,000 death benefit payment three weeks late after enduring months of frustrating interactions and poor customer service, including a two-month wait to respond to a simple query.

ASIC has responded to these findings with a call to action, urging the super industry to review and address the deficiencies in death benefit immediate claims handling.

The commission has made 34 recommendations, advocating for streamlined processes, improved guidance and training for staff, and the removal of barriers for First Nations members.

'Grieving Australians should not have to suffer further stress because of the failure of superannuation trustees to approach claims in a timely, clear, and respectful manner,' Constant said.

'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,'

'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 chair Joe Longo emphasised the gravity of the situation, stating that such disconnects are unacceptable, particularly in the superannuation sector, which affects everyone from the boardroom to the living room.

He pointed out that the heart of the issue lies in leadership that lacks a firm grasp on the fund's data, systems, and processes, ultimately leading to customer suffering.

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The Association of Superannuation Funds of Australia (ASFA) has acknowledged the report's findings and expressed remorse for the sector's shortcomings.

ASFA chief executive Mary Delahunty conveyed the industry's apology, admitting they had failed some members and their families during their time of need.

She assured the sector is committed to rectifying these issues and working diligently until they get it right.

For our readers, many of whom are likely to have superannuation funds and may one day need to navigate the death benefit claims process, this report serves as a crucial reminder to stay informed and vigilant.

Understanding your rights and the obligations of your super fund is essential, especially during life's most challenging moments.

Key Takeaways

• The ASIC investigation revealed systemic failures in superannuation trustees' handling of death benefit claims, causing additional distress to grieving Australians.
• The report highlighted that none of the investigated trustees had proper monitoring or reporting on claims handling times, with 78 per cent of claims experiencing delays due to internal processing issues.
• ASIC's 34 recommendations call for the super industry to overhaul claims handling with streamlined processes, better training, and improved support for First Nations members.
• The Association of Superannuation Funds of Australia has apologised for letting down members and their families during difficult times and is committed to making necessary improvements.

Have you or someone you know faced difficulties with superannuation claims? What changes would you like to see in the industry to ensure that such distressing situations are avoided in the future? Your insights are valuable, and together, we can advocate for a more responsive and compassionate superannuation system.

 

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Always put everything in writing either by email or post and keep copies of your correspondence and their replies, as evidence. Make sure all dates are on both sets of correspondence. You may have a slightly better outcome as against phone calls you may not be able to prove were made or received.