ASIC finds systemic failures in super death benefit handling

The Australian Securities and Investments Commission has exposed systemic failures in how superannuation funds handle death benefit claims, revealing delays, poor service, and a lack of board oversight that left grieving families waiting months for superannuation payouts.

The 2025 report reviewed 10 major trustees representing 38 per cent of the market and found none tracked end-to-end claims times or performance.

The regulator also uncovered “systemic failures” by some trustees, including excessive delays and poor service, unclear and inconsistent processes, ineffective and insensitive communication, and inadequate support for First Nations claimants.

The findings follow a damning assessment of claims handling at two of the nation’s largest super funds, Australian Super and CBUS, which resulted in ASIC suing both funds.

CBUS was sued in the Federal Court last year for failing to process more than 10,000 death and disability payments, while Australian Super was hit with a $27 million fine for similar breaches across 7,000 claims, including taking three years to pay a claim to a deceased person’s relative, despite having the required information.

ASIC chair Joe Longo said the industry should immediately review and address death benefits claims handling and adopt 34 recommendations from the regulator.

“At the heart of this issue is leadership that doesn’t have a grip on the fund’s data, systems and processes – and ultimately it is the customers who suffer for it,” Mr Longo said.

“This kind of disconnect is unacceptable in any area of corporate Australia, but in the superannuation sector it is particularly serious, because super affects everyone from the boardroom to the living room.”

In one case, a widow grieving her husband’s death faced significant delays and frustration when claiming his $600,000 death benefit, ASIC found. Despite a binding nomination naming her as the sole beneficiary, the trustee repeatedly requested documents she had already provided and, at one point, incorrectly stated there was no nomination.

Despite her requests for clarity and assistance, the process dragged on for nearly a year, including a three-week delay after approval due to a misplaced document. Even after payment, resolving a query about the benefit calculation took an additional two months.

“Many of the complaints we read were distressing. We saw deep grief, vulnerability, frustration and genuine suffering,” ASIC Commissioner Simone Constant said.

“Grieving Australians should not have to suffer further stress because of the failure of superannuation trustees to approach claims in a timely, clear and respectful manner.

“Trustees have not put in place meaningful performance objectives, tracking or reporting, and have failed to approach claims handling with consumers front of mind.”

ASIC said there were wide gaps between the slowest and fastest trustees, with the slowest only processing claims within 90 days 8 per cent of the time, while the fastest processed 48 per cent of claims within that time frame.

The regulator also found that 27 per cent of claims involved poor customer service, such as calls not being returned or queries being dismissed.

For First Nations claimants, ASIC found that more than three-quarters of claims were delayed by processing issues within the trustee’s control.

ASIC also found that superannuation trustees outsourcing the process to a third-party provider closed only 15 per cent of claims within 90 days. Those who handled claims in-house completed 35 per cent in the same time frame.

The regulator found that superannuation boards failed to conduct proper oversight of death benefits for members.

Many did not receive regular or complete reporting on claims handling performance, with some entirely unaware of delays in uninsured claims, which comprised the majority of cases.

ASIC found boards lacked access to end-to-end data, failed to set performance benchmarks, and were unable to identify or address systemic failures. This absence of structured oversight represented a clear governance breakdown in an area with significant consequences for bereaved members and their beneficiaries.

ASIC has issued 34 recommendations to trustees to improve death benefit handling, including better customer service and faster response times; improved monitoring and reporting on claims time frames; streamlined processes and procedures; better staff training and guidance; removing barriers for First Nations members and claimants; and clearer communications and more support for members.

ASIC’s review included retail, industry and public sector trustees, with both insourced and outsourced administration models. Superannuation funds investigated included industry funds Australian Retirement Trust, HESTA, Hostplus and UniSuper, as well as retail funds operated by AMP, MLC and Colonial First State.