Retirement should be a time of relaxation and enjoyment, a reward for decades of hard work.

However, for many Australians, the path to a comfortable retirement is fraught with uncertainty.

Recognising the need for better protection and service standards, the Labor government stepped in with new legislation aimed at ensuring super funds are up to scratch.

The proposed mandatory service standards were a response to several concerns that significant superannuation funds are not adequately safeguarding the financial futures of Australians.

These standards were designed to instil a code of conduct emphasising the timely and compassionate handling of death benefits, efficient processing of insurance claims, and clear communication with members.

Financial Services Minister Stephen Jones made it clear that the industry needs to improve its services within the year.

The government aimed for a more efficient way of processing claims, especially as people approach retirement. Image Credit: Pexels/Picas Joe

According to his report, approximately 20 per cent of Australians are expected to reach retirement age by January 2026.

'Simple message to funds is we've just got to get better. You've got to get better at the way that you are dealing with your members,' Minister Jones said.

The new regulations should ensure that members receive the level of service they deserve.

These changes are particularly crucial in the handling of death benefit claims—something Minister Jones identified as the 'biggest problem'.

The urgency of this issue was further underscored by the Australian Securities and Investments Commission's (ASIC) civil proceedings against United Super and CBUS for alleged extensive delays in processing benefits—both death and permanent disability claims.

The impact of these delays could be devastating for families already dealing with the loss of a loved one.

With potential mortgage payments and financial obligations looming, swift claim processing should be the norm.

'That's exactly what life insurance is designed to deal with, and for those claims to be taking months and months and months, if not a year, to process, is just not good enough,' Minister Jones remarked.

In addition to these service standards, the government also flagged changes to the taxation of super accounts.

Treasurer Jim Chalmers announced plans to increase the tax rate on super accounts containing more than $3 million.

The proposed changes would see the tax rate on earnings above $3 million double from 15 per cent to 30 per cent.

These changes could affect a small fraction of super account holders.

Readers may learn more about these tax rate changes here.

It's essential for Australians over 60 to stay informed about their superannuation funds and the protections in place.

The new legislation could be a significant step towards ensuring that your retirement dreams are not only preserved but also respected by the institutions tasked with managing your savings.

Key Takeaways

• Mandatory service standards are to be legislated for superannuation funds to protect Australians' financial future.
• The new code of conduct emphasised prompt and empathetic handling of death benefits, efficient processing of insurance claims, and clear communication with members.
• Financial Services Minister Stephen Jones stressed the need for superannuation funds to improve service within the following year.
• The government previously proposed to double the tax rate on earnings for super accounts with over $3 million.

How do you feel about these proposed changes? Will they make a significant difference in the quality of service provided by super funds? Share your thoughts and opinions with us in the comments below.

 

[alkyon]

I too recently went through a traumatic experience making a legitimate claim on my superfund (my money not theirs!) upon my retirement. No names mentioned but it is the biggest one in Australia. They unnecessarily delayed the processing for many months (automated reply said it should take about a week), and when I tried to speak to a human being, the majority of staff were born in Southern Asia and were incapable of telling the truth and taking ownership of my claim. They were lazy, incompetent and heartless. Not racist, just a sad fact.
I ended up taking them to the Financial Industry Ombudsman to get some action.
The other sad and terrible fact I discovered in my own investigation was that 100% of the top executives and directors were all senior trade union and Labour Party hacks. None of them (yes, I found all of their email addresses) could give a sh_t about me as a long term working class member.
I found this to be the case for all of the large “Members Own” funds.
In the end, there was absolutely no reason or excuse for the long delay.
Shame on them all!

So why don't you say which fund so we are enlightened?

 

[Soxylox]

Won't really bother me. I've had to use my super for the last few years because I couldn't get the disability pension and still trying to get the aged pension. I now have almost nothing left in my super account.