Watchdog slams super funds over ‘alarming’ delays in paying death benefits

Millions of Australians are failing to lodge the right paperwork with their superannuation fund, which is having massive consequences for their loved ones. In a grim update, the Australian Securities and Investments Commission (ASIC) warns funds are failing to pass on death benefits, which often take years to process. ASIC commissioner Simone Constant told NewsWire said it was a “grave concern” to the corporate cop the service grieving Australians are receiving from super funds. “We are saying to members, think of yourself as customers and demand service level and support consistent with being a valued customer,” she said. The latest release is part of an ongoing series by the corporate watchdog, which is monitoring how superannuation funds handle death benefit claims, following complaints from the public. Some improvements have been made, but ASIC says ongoing weaknesses in the death benefit claims handling practices of straggling superannuation trustees risk undermining confidence in the industry at a time when the population is ageing. Ms Constant warns in some of the more egregious cases members’ loved ones will wait years to get their money, while funds make them jump through hoops. “They are doing things like having to repeatedly provide evidence of death and having to go back to the same hospital where they lost a loved one to get elements of evidence.” Ms Constant said a lack of tracking from funds means members are often forced to re-explain their case to get money that is ultimately owed to them. “(Members’ families) might be left behind and not just in terms of a loss of a loved one but in terms of their responsibilities. “We have seen grandparents for example caught up in this who have responsibilities for the grandkids after they lost their own child.” “The fact funds haven’t stepped up and into this in a comprehensive, complete and accelerated way is quite alarming to us.” What should Australians do? Households are being urged to make the process easier for their families by getting a valid binding death benefit. According to ASIC, nearly 90 per cent of members do not have a binding nomination - making the process harder for grieving families. Of those that have a nomination, around 31 per cent have a non-binding arrangement, while 6 per cent have a non-lapsing agreement. ASIC warns Australians of the importance of making a binding death benefit nomination, with failing to do so could result in their preferred beneficiary not receiving the death benefit in a timely manner, or potentially not at all. “Get yourself familiar with important parts of the processes such as making a valid binding death benefit nomination, as it will make it so much easier for those you leave behind,” Ms Constant said. “Many assume their death benefit will simply follow their estate or their Will and that is not the case. “If your fund does not support you in a simple and effective way to make the valid binding death benefit nomination and get that in order, then think about yourself as an active customer that can make choices as to whether the fund is right for you.”