ASIC Sues Australian Super Over Death Benefit Claim Delays

Australian Super, the largest superannuation fund in Australia, is facing legal action by the Australian Securities and Investments Commission (ASIC) over alleged delays in processing death benefit claims for thousands of members. ASIC has accused Australian Super of failing to handle these claims efficiently, honestly, and fairly over a period spanning from July 2019 to October 2024. The regulatory body claims that nearly 7,000 death benefit claims took anywhere from four months to four years to be assessed by the fund.

Furthermore, ASIC alleges that Australian Super did not promptly pay out benefits to the families of at least 752 deceased members. This delay in processing payments has raised concerns about the financial burden placed on the families of the deceased and the emotional distress caused by these prolonged waiting periods. ASIC’s Deputy Chair, Sarah Court, emphasized the importance of timely processing of death benefit claims to alleviate additional stress on grieving individuals during an already challenging period.

Australian Super’s recent legal troubles follow a $27 million fine imposed by the Federal Court for its failure to merge duplicate member accounts, as required by law. The fund, managing over $355 billion in retirement savings for nearly 3.5 million members, has pledged to carefully consider ASIC’s claims and respond accordingly. It has also expressed appreciation for ASIC’s broader focus on addressing industry-wide issues related to death benefit claims processing.

This legal action against Australian Super is part of ASIC’s broader crackdown on delays in death and disability payments within the superannuation sector. In a similar move last year, ASIC took industry super fund Cbus to court for its failure to promptly process over 10,000 death and disability payments. Cbus, in response, apologized for the delays and committed to compensating affected members.

The superannuation industry, with assets totaling $4 trillion, has come under increased scrutiny, prompting a Senate inquiry that highlighted the need for significant reforms to better protect members’ interests. ASIC is expected to release a comprehensive report on death benefit payment claims in the superannuation industry in the near future, further underscoring the regulatory focus on improving transparency and efficiency in the sector.

As the spotlight intensifies on super funds’ handling of death benefit claims, the industry faces growing pressure to streamline processes and ensure timely and fair disbursement of benefits to beneficiaries. The implications of these legal actions extend beyond individual cases, signaling a broader push for accountability and improved practices within Australia’s superannuation landscape.