Labor to legislate mandatory service standards for superannuation funds

Large superannuation funds will soon be hit with tough new standards as a way to safeguard and protect vulnerable Australians headed for retirement.

Mandatory services standards will be legislated for superannuation funds in order to safeguard the financial futures of Aussies headed for retirement, amid calls from the government on companies to “get better”.

The new code of conduct will focus on ensuring the timely and compassionate handling of death benefits, efficient processing of insurance claims and ensuring clear, respectful and accessible communication with members.

Financial Services Minister Tony Jones Jones said standards needed to be raised within the next year, with about 20 per cent of Australians set to reach retirement age by January 2026.

“Simple message to funds is we’ve just got to get better. You’ve got to get better at the way that you are dealing with your members,” he said.

The new code of conduct for super funds will be ‘enforceable’ and ensure the handling of death benefits and efficient processing of insurance claims. Picture: Supplied

“These new standards will be delivered by regulation. They’ll be enforceable, and they’ll ensure that members get the level of service that they deserve.”

In the interim, treasury will begin consultation with regulators, industry stakeholders and consumer advocates, with the draft standards set to be released publicly.

Mr Jones said the “biggest problem” was around the processing of death benefit claims.

In November last year, ASIC launched civil proceedings against United Super and CBUS over alleged extensive delays for death benefits and total and permanent disability claims.

CBUS was lashed over claims more than 10,000 members had waited more than 90 days for the requests to be processed, amounting to financial impacts of up to $20m.

“This is going to be one of the hardest times in their life,” he said.

“They’ve probably got a mortgage payment and they’re wondering how are they are going to make ends meet.

“That’s exactly what life insurance has designed to deal with and for those claims to be taking months and months and months if not a year to process is just not good enough.”

Assistant Treasurer Stephen Jones called on super funds to ‘get better’. Picture: NewsWire/ John Appleyard

Mr Jones also repeatedly ruled out any further increases in the superannuation guarantee which will increase from 11.5 per cent to 12 per cent on July 1, 2025.

With parliament set to resume from Tuesday next week, Jim Chalmers on Monday flagged the government would attempt to pass its concession to increase the tax rate on super accounts which contained more than $3m over the next fortnight.

The new rates would double the tax rate on earnings above $3m from 15 per cent to 30 per cent, and would only affect about 80,000 of the 17 million people with super accounts.

“I would see that fortnight as an opportunity to pass those changes. Those changes reflect or impact a very, very tiny sliver of people with the highest superannuation balances,” he told the ABC on Monday.

Originally published as Labor to legislate mandatory service standards for superannuation funds