When it comes to retirement, Australians rely heavily on their superannuation funds to secure their financial future. However, recent scrutiny over AustralianSuper, the nation’s largest superannuation fund, has raised concerns among retirees and those nearing retirement age. The fund is currently under investigation by the Australian Securities and Investments Commission (ASIC) for allegedly delaying death benefit payouts, casting a shadow over the $4.1 trillion superannuation industry.
AustralianSuper, which boasts a significant portion of the nation’s retirement savings, has been accused of poor service, particularly in the timely processing of death benefits. This has prompted the government to promise a crackdown on the industry. The Sydney Morning Herald reported that ASIC has formally initiated an investigation into the fund’s practices, echoing similar issues that led to legal action against industry fund Cbus in November.
In a move to address these concerns, AustralianSuper announced in December that it would repay $4.2 million to the beneficiaries of deceased members as compensation for the delays. Approximately 7,000 individuals were affected, with some claims dating back to May 2020 not being resolved within the fund’s four-month target timeframe.
Rose Kerlin, AustralianSuper’s chief member officer, attributed the backlog to an increase in members, particularly elderly ones, and a rise in member deaths during the COVID-19 pandemic, which led to a significant growth in death claims. This, in turn, impacted the assessment and payment timeframes.
While ASIC has declined to comment on the ongoing investigation, a spokesperson for AustralianSuper stated that the fund could not confirm any investigations. Kerlin expressed regret for the service shortcomings, saying, ‘AustralianSuper is committed to putting members first but we don’t always get everything right and we are sorry for that.’
In an effort to improve services for members, AustralianSuper has launched a new bereavement centre to handle death claims with dedicated case managers. This initiative is part of the fund’s ‘unrelenting focus on improving services for members.’
The issue of delayed payments is not isolated to AustralianSuper. Cbus is currently facing the Federal Court over allegations of failing to process over 10,000 claims for death and disability payments promptly. ASIC has estimated the losses to be around $20 million. Sarah Court, ASIC’s deputy chair, has indicated that the watchdog views the customer service failings on death and disability claims as a ‘broader, industry issue.’
In response to these service failings, the government is set to legislate mandatory service standards for super funds. Finance Services Minister Stephen Jones emphasised that the new standards would ensure that member interests are at the core of service delivery, with a particular focus on speeding up the payment of death benefits and other insurance claims, as well as improving communication with members.
Jones has been forthright in his message to super funds, stating that service standards are ‘nowhere near where they needed to be’ and that Australian workers deserve better. The reforms have been met with approval from industry groups and consumer advocates. Xavier O’Halloran, CEO of Super Consumers Australia, hailed the move as a ‘massive win’ for super fund members, highlighting that delays in payments by some super funds have forced people to struggle with day-to-day living costs and debts.
As ASIC prepares to release its report on death benefit claims handling in the coming months, the superannuation industry is poised for significant changes. These reforms aim to enhance the reliability and efficiency of super funds, which are crucial for the financial well-being of Australians in their retirement years.
Have you faced any challenges with your super fund? Let us know in the comments below, and join the conversation on how we can ensure a secure and stress-free retirement for all Australians.
Also read: Thousands of Aussies wait on delayed life insurance claims through super funds
