When Lisa’s husband passed away unexpectedly, she assumed accessing his superannuation death benefit would be straightforward. Instead, she spent months navigating a bureaucratic maze.
She repeatedly sent documents, waited weeks for callbacks and struggled to get answers from his fund.
Her experience is far from unique. A damning new report reveals systemic failure by Australia’s A$4 trillion superannuation industry in handling members’ death benefits.
A system in disarray
The Australian Security and Investments Commission’s landmark review of ten major super trustees, managing 38% of super assets, exposes an industry that is not serving its members.
Grieving families routinely face excessive delays, insensitive treatment and unnecessary hurdles when trying to access death benefits. It found they sometimes waited over a year for payments to which they were legally entitled.
The central problem was a fundamental breakdown in claims processing, with five critical failures exacerbating inefficiency and distress.
1. Poor oversight
No trustee monitored end-to-end claims handling times, leaving boards unaware of how long families were waiting. While the fastest trustee resolved 48% of claims within 90 days, the slowest managed just 8%.
In one case, a widow waited nearly a year despite her husband having a valid binding nomination. ASIC found 78% of delays stemmed from processing inefficiencies entirely within trustees’ control.
2. Misleading and inadequate information
Many funds misled on processing times and masked extreme delays. Boards often received reports only on insured claims, despite most death benefits not involving insurance. This meant boards were unable to fix systemic problems.
3. Process over people
Risk-averse procedures often overrode common sense. Many funds imposed claim-staking – delaying payments for objections – even for straightforward cases, adding a median 95 day delay.
Communication failures further compounded delays, with claimants receiving inconsistent advice and few or no status updates.
4. Outsourcing without accountability
Claims handled in-house were processed significantly faster than those managed by external administrators. Only 15% of outsourced claims were resolved within 90 days, compared to 36% of in-house claims.
The securities commission is calling for stronger oversight. External administrators significantly slow down responses, so some funds may need to bring claims processing back in-house to ensure efficiency.
5. Lack of transparency
Many funds failed to provide clear timelines or explanations for delays and had no accountability mechanisms.
The ten funds investigated include the Australian Retirement Trust, Avanteos (Colonial First State), Brighter Super, Commonwealth Superannuation Corporation, HESTA, Hostplus, NM Super (AMP), Nulis (MLC), Rest and UniSuper.
Two others, Australian Super and Cbus, are being sued separately by ASIC for either failing to pay out or delaying payments to thousands of eligible beneficiaries.
KEY FINDINGS
- None of the trustees monitored or reported on end-to-end death benefit claims handling times
- 27% of claims files reviewed involved poor customer service – for example, calls were not returned, queries were dismissed
- 8% vs 48% was the difference in claims closed in 90 days between the slowest and the fastest trustee
- 78% of claim files reviewed were delayed by processing issues within the trustee’s control
- 17% of claim files reviewed involved vulnerable claimants. About 30% of those were handled poorly
Source: Taking ownership of death benefits: How trustees can deliver outcomes Australians deserve, ASIC, March 2025.
Will ASIC’s fixes work?
ASIC has made 34 recommendations to improve death benefit processing. This will require real change, not box ticking. Changes should include setting performance objectives and empowering frontline staff to cut unnecessary steps.
There should be consequences for failure. Unlike the United Kingdom, which fines pension providers for missing statutory deadlines, ASIC’s recommendations lack penalties.
Without consequences, some funds may continue prioritising administrative convenience over members receiving their entitlements.
What needs to happen now?
ASIC’s report is a wake-up call, but real reform requires strong action.
Super funds must be held to clear, binding processing timelines, with meaningful penalties for non-compliance. Standardising requirements across the industry would eliminate unnecessary hurdles, ensuring all beneficiaries are treated fairly.
Beyond regulation, funds must improve communication and accountability. Bereaved families deserve clear, plain language guidance on what to expect, not bureaucratic roadblocks or sudden document requests.
Technological upgrades should focus on reducing delays, not just internal efficiencies.
And to better support families, an independent claims advocate could help navigate the process, ensuring no one is left to struggle alone.
Has ASIC gone far enough?
While ASIC’s review is a step in the right direction, it does not fundamentally overhaul flawed claims-handling practices.
The recommendations lack enforceability, relying on voluntary compliance.
Also, the role of insurers within super remains largely unaddressed, despite death benefits being tied to life insurance policies. This often causes further complications and delays.
Ensuring insurers adopt and apply ASIC’s recommendations will be critical for meaningful change.
Most importantly, super funds must remember that behind every claim is a grieving family. No one should have to fight for what they are owed during one of the most stressful times in their life.
Natalie Peng, Lecturer in Accounting, The University of Queensland
This article is republished from The Conversation under a Creative Commons license. Read the original article.
