On Monday, the Australian Securities and Investments Commission (ASIC) released 34 recommendations for superannuation trustees, prompted by its alarming review of death benefit claims handling. The review uncovered significant delays, poor customer service and systemic failures, all of which, ASIC said, exacerbated the grief of beneficiaries.
ASIC’s report, Taking ownership of death benefits: How trustees can deliver outcomes Australians deserve (Report 806), examined the claims-handling practices of 10 trustees representing 38 per cent of all member funds in APRA-regulated super funds.
The findings revealed significant deficiencies across the industry, with ASIC chair Joe Longo calling for urgent leadership and reform.
ASIC reviewed Australian Retirement Trust, Avanteos (Colonial First State), Brighter Super, Commonwealth Superannuation Corporation, HESTA, Hostplus, NM Super (AMP), Nulis (MLC), Rest, and UniSuper.
“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,” Longo 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.”
The report highlighted substantial variation in claims handling times. While the fastest trustee closed nearly 48 per cent of death benefit claims within 90 days, the slowest trustee managed only 8 per cent in the same time frame.
ASIC also found that 78 per cent of claims reviewed had delays caused by processing issues within the trustee’s control.
“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,” ASIC Commissioner Simone Constant said.
“Trustees have not put in place meaningful performance objectives, tracking or reporting, and have failed to approach claims handling with consumers front of mind.”
One of the most distressing cases involved a First Nations widow who waited over 500 days to receive a $100,000 death benefit.
“Many of the complaints we read were distressing. We saw deep grief, vulnerability, frustration and genuine suffering,” Constant said. “The money from a death benefit can make a huge difference, and each day a trustee delays that payment causes real harm to families. Trustees need to do better.”
ASIC’s recommendations focus on improving customer service, monitoring claims-handling time frames, streamlining processes, enhancing staff training and removing barriers for vulnerable claimants, particularly First Nations members. The regulator has also put the industry on notice, stating it will review trustees’ progress to ensure meaningful change is made.
Earlier this month, ASIC launched civil penalty proceedings against AustralianSuper over alleged delayed processing of nearly 7,000 death benefit claims.
In November last year, ASIC also filed civil penalty proceedings against United Super Pty Ltd, the trustee of Cbus after alleging more than 10,000 members and claimants were impacted by death benefits and total and permanent disability insurance claims taking more than 90 days to be processed.
ASFA issues apology
Following ASIC’s statement, Association of Superannuation Funds of Australia (ASFA) CEO Mary Delahunty acknowledged the sector’s shortcomings, stating: “The superannuation sector knows we have let down some of our members and their families at a time when they needed us, and we are sorry.
“While the majority of our members and their families have a seamless experience with death benefits claims, we know we need to do better to make sure this is the experience of as many people as possible.
“As a sector, we are committed to keep working until we get it right.”
In response to ASIC’s 34 recommendations, Delahunty said ASFA has already rolled out improvements, including the new Death Benefits Payments Service Standard, aimed to ensure better communication, timely updates for claimants and a more compassionate approach.
Improvements in death benefits claims handling delays are already showing, she claimed, citing the latest AFCA complaints data, which revealed a drop from 379 complaints in 2023 to 179 in 2024, with just 33 complaints reported over the last two quarters.
“We commit to keep working until we get it right for all our members and their families,” the CEO said.
Bragg launches attack at Labor
Liberal senator Andrew Bragg strongly criticised the government’s response to ASIC’s findings, accusing Labor of failing to hold super funds accountable.
In a statement on Monday, Bragg accused Labor of turning a blind eye on super, stating: “Australians are being forced to wait years for insurance claims to be paid by unprincipled and incompetent super funds. It is a disgrace.”
He accused superannuation trustees of prioritising financial ties to unions over their duty to members, stating that “these boards are adept at shovelling money to unions but are inept in meeting their insurance obligations to members”.
Bragg also pointed to the contrast in Treasurer Jim Chalmers’ responses to financial misconduct, highlighting his strong stance against banks while remaining silent on super funds.
“Jim Chalmers has rightly had a lot to say when it comes to the banks and supermarkets but has had nothing to say on super.”
