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Thursday, Apr 03, 2025
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ASIC Highlights Delays in Death Benefit Payments from Super Funds
A recent ASIC report reveals inadequate service and processing issues in Australia's superannuation industry affecting beneficiaries.
The Australian Securities and Investments Commission (ASIC) has released findings indicating significant delays in the processing of death benefit claims by superannuation funds, identifying systemic shortcomings in customer service that have caused genuine suffering for beneficiaries.
The review examined the practices of ten trustees, which collectively manage around 38 percent of the benefits regulated by the Australian Prudential Regulation Authority.
Death benefits, which consist of the remaining superannuation balance in a member's account after their demise, are intended to be distributed to beneficiaries—typically family members—expeditiously.
However, ASIC's findings reveal that in more than three-quarters of the claims analyzed, delays were attributable to processes within the control of the funds.
The review included a diverse array of super funds, including retail, public sector, and industry funds such as Australian Retirement Trust and UniSuper, although it excluded Cbus and AustralianSuper due to ongoing legal action against those entities.
Key findings from ASIC’s report include:
- A notable 78 percent of death benefit claim files reviewed displayed delays linked to processing issues under the trustees' management.
- The speed of processing claims varied widely; Colonial First State's trustee Avanteos managed to close roughly 48 percent of claims within 90 days, while Rest, another trustee, completed only 8 percent of claims within the same timeframe.
- Instances of poor customer service were evident in 27 percent of claims, highlighted by failure to return calls, dismissive responses to inquiries, and requests for excessive information.
- One distressing case involved a trustee delaying the payment of a $100,000 death benefit to a First Nations woman for over 500 days following her husband's passing.
ASIC Commissioner Simone Constant remarked on the distressing nature of the complaints examined, emphasizing that delays in death benefit payments can exacerbate the emotional and financial burdens faced by grieving families.
The failure to deliver timely support to beneficiaries has been underscored as a serious issue.
In response to these findings, ASIC has put forth 34 recommendations aimed at enhancing service quality among super funds.
These recommendations urge improved customer service practices, expedited claim processes, better monitoring and reporting protocols, enhanced training for staff, and measures to remove obstacles faced by First Nations claimants.
The review examined the practices of ten trustees, which collectively manage around 38 percent of the benefits regulated by the Australian Prudential Regulation Authority.
Death benefits, which consist of the remaining superannuation balance in a member's account after their demise, are intended to be distributed to beneficiaries—typically family members—expeditiously.
However, ASIC's findings reveal that in more than three-quarters of the claims analyzed, delays were attributable to processes within the control of the funds.
The review included a diverse array of super funds, including retail, public sector, and industry funds such as Australian Retirement Trust and UniSuper, although it excluded Cbus and AustralianSuper due to ongoing legal action against those entities.
Key findings from ASIC’s report include:
- A notable 78 percent of death benefit claim files reviewed displayed delays linked to processing issues under the trustees' management.
- The speed of processing claims varied widely; Colonial First State's trustee Avanteos managed to close roughly 48 percent of claims within 90 days, while Rest, another trustee, completed only 8 percent of claims within the same timeframe.
- Instances of poor customer service were evident in 27 percent of claims, highlighted by failure to return calls, dismissive responses to inquiries, and requests for excessive information.
- One distressing case involved a trustee delaying the payment of a $100,000 death benefit to a First Nations woman for over 500 days following her husband's passing.
ASIC Commissioner Simone Constant remarked on the distressing nature of the complaints examined, emphasizing that delays in death benefit payments can exacerbate the emotional and financial burdens faced by grieving families.
The failure to deliver timely support to beneficiaries has been underscored as a serious issue.
In response to these findings, ASIC has put forth 34 recommendations aimed at enhancing service quality among super funds.
These recommendations urge improved customer service practices, expedited claim processes, better monitoring and reporting protocols, enhanced training for staff, and measures to remove obstacles faced by First Nations claimants.
