Australian Super Investigated for Delays in Death Benefit Pay-outs

Australian Super is currently under scrutiny by ASIC due to delays in disbursing death benefits, which follows a recent multimillion-dollar compensation the super fund had to pay for similar issues. Last November, Australian Super agreed to pay approximately $4.2 million to around 7,000 beneficiaries for death benefit claims that were not processed within the fund's internal target of four months from receipt of the claim. Additionally, the fund is assessing a smaller group of beneficiaries who may have been similarly affected.

Rose Kerlin, the Chief Member Officer of Australian Super, stated that the fund aims to contact all impacted beneficiaries to offer compensation that would, ideally, restore their financial position as if the delays had not occurred. Despite these efforts, she acknowledged that the fund has occasionally fallen short of its goals and expressed regret for these shortcomings.

The issue of delayed payments is not isolated to Australian Super, as similar problems have surfaced across the sector. Last November, ASIC also initiated legal action against Cbus for comparable delays in processing insurance claims. Xavier O'Halloran, Chief Executive of Super Consumers Australia, noted that these delays are prevalent across various funds, especially concerning claims at critical life stages such as disability or death benefits. These delays can impose significant financial hardships on families, particularly when they lose a breadwinner.

O'Halloran also criticised the inconsistency and lack of enforceability in the claims processing timelines set by various funds, highlighting that even when timeframes are set, they often include significant exemptions. He advocates for a mandatory customer service standard to ensure a baseline level of service across the superannuation sector, which would protect consumers from such risks.

This situation underscores the benefits of adviser-generated policies, which are not exposed to these kinds of delays and inconsistencies, providing a more reliable and swift claims process.