Nick Bruining: Six-week outage locks one million HESTA members out of accounts

A planned system outage and the suspension of most transactions is affecting more than one million members of industry superannuation fund giant HESTA.

The lock-out took effect on Easter Saturday and is scheduled to end on June 1, meaning members will have only limited access to their accounts for a six-week period.

HESTA — the default industry super fund for employees in the health and community services sector — is in the process of upgrading its systems and outsourcing fund operations to Grow Inc.

The trustees of the fund provided members with details of the service interruption in late February, just days before world financial markets were thrown into turmoil after US President Donald Trump announced a series of savage tariffs.

Members cannot access their account either online or via the HESTA smartphone app but can obtain “limited information” by calling the call centre.

“Shifting to this new technology platform brings the opportunity to develop more personalised experiences for members, making it easier for them to manage their super,” a spokesperson said.

Independent financial planner Sam Graham, who provides advice on industry super funds, said he had never heard of a similar outage.

“Fund upgrades and new back-office systems are a part of life, but I have never heard of it lasting six weeks,” Mr Graham said. “This seems excessive.”

While most accumulation fund members don’t regularly check their accounts, the recent market turmoil had seen a big spike in enquiries to super fund call centres.

Members hoping to log in to their account or withdraw money will not have their requests processed until after the lock-out period ends.

“For retirees that may need to access cash unexpectedly, this could be a very anxious time, particularly when it stretches out to more than a month,” Mr Graham said.

HESTA will process “urgent payments” of up to 80 per cent of an account balance where the request relates to financial hardship, compassionate grounds or terminal illness. All of these conditions are defined in superannuation law.

The upgrade also means members retiring and hoping to convert their super into a pension account will be prevented from doing so until after June 1.

Existing ABP clients will receive early payments.

Investment switch requests must be completed manually in paper form and sent to HESTA.

The effective date for the investment switch will be the date the form is received, but the actual switch will not be processed at the member account level until after June 1.

People posting forms in rather than scanning and emailing the could be at a disadvantage.

“With markets swinging by as much as 5 per cent in one day, a delay could mean a $20,000 difference in a $400,000 retirement fund,” Mr Graham said.

“That’s an entire year’s minimum pension payment for someone in their late 60s.”

HESTA’s spokesperson said the system transition was the largest technology project it had undertaken “and we’re confident it will set us up to deliver better outcomes for members”.

Nick Bruining is an independent financial adviser and a member of the Certified Independent Financial Advisers Association