Some super funds have been found to charge fees to deceased members, according to a report by the Australian Securities and Investments Commission (ASIC). The report, known as REP 806, highlighted how superannuation funds handled death benefit claims, revealing that insurance premiums and financial advice fees were still being deducted from deceased member accounts. This practice has drawn parallels to the criticism faced by financial planning firms for similar actions.
The ASIC report underscored the prevalence of trustees continuing to charge administration and investment fees even after a member’s passing. While the report did not provide specific data on the fees charged, it raised concerns about the common practice across superannuation funds. The report emphasized that trustees should refrain from deducting insurance premiums or financial advice fees while processing death benefit claims.
One significant aspect of ASIC REP 806 is its comprehensive review of ten major superannuation funds spanning industry, retail, and corporate sectors. The report highlighted that none of the funds achieved a 100% completion rate for claims handling within the review period, with varying timeframes for processing claims observed among different trustees.
Notably, funds handling death benefit claims internally or through related-party service providers demonstrated better performance compared to those outsourcing the process to third-party providers. The report indicated that insourced trustees closed a higher percentage of claims within 90 days compared to outsourced trustees, reflecting the impact of internal processing on efficiency.
In response to the ASIC report, the Association of Superannuation Funds of Australia (ASFA) issued a formal apology on behalf of its members for the shortcomings in claims handling. ASFA’s chief executive, Mary Delahunty, acknowledged the sector’s failure in meeting member and family expectations but noted that remedial actions were underway, leading to a decline in complaints lodged with the Australian Financial Complaints Authority (AFCA).
The findings from the report shed light on the operational challenges and service deficiencies within the superannuation industry, emphasizing the need for improved processes and member-centric practices. The revelations have sparked discussions on regulatory oversight and the role of trustees in ensuring transparent and efficient handling of member benefits, particularly in sensitive situations such as death benefit claims.
As the industry grapples with the repercussions of the ASIC report, there is a growing call for heightened accountability and governance measures to safeguard member interests and uphold the integrity of superannuation funds. The findings serve as a stark reminder of the importance of robust oversight and ethical practices in managing members’ financial affairs, especially during critical life events like death benefit claims.
📰 Related Articles
- SuperGuide: Navigating Super Funds for Secure Retirement Planning
- Super Funds Outperform with 10.5% Growth in 2025
- Super Funds Adapt to Global Uncertainties with Resilience
- Super Funds Achieve Stellar 2024 Performance, Beating Expectations
- Organizations Divesting Super Funds from Fossil Fuels Gain Traction