When super funds get it wrong, it is unacceptable – they must deliver for members

When super funds get it wrong it is unacceptable, and the repercussions can be devastating, both financially and emotionally.

Super funds are often one of the first points of contact with someone who has lost a loved one.

It’s heartbreaking to hear the stories of Australians who have lost a loved one unexpectedly, particularly when that heartbreak is compounded by the frustration some people experience when interacting with the super system.

For the most part, super conducts the business of growing retirement savings very efficiently. There are more than 22 million accounts. In a given year, the super system will process more than 160 million separate employer contributions, make more than 500,000 investment switches on member requests and answer thousands of member questions every day.

We are also often one of the first points of contact with someone who has lost a loved one. In a given year, funds and service providers will process around 10,000 death insurance claims, and around 36,000 claims related to disability.

As an industry, we know we need to provide those beneficiaries with the communication, support and empathy they need and deserve. When we get it wrong it is unacceptable, and the repercussions can be devastating, both financially and emotionally.

That’s why improving service has been a focus for the sector and for our work at the peak body, the Association of Superannuation Funds of Australia (ASFA), for 12 months now.

ASFA is the voice of super, and we have gathered together the industry, regulators and other interested parties to develop comprehensive guidelines aimed at improving how we interact with our customers during the very difficult time of making a death benefit claim. We sought the help of Jocelyn Furlan, the highly respected former chair of the Superannuation Complaints Tribunal.

As a result, in September ASFA released two pivotal documents: the ASFA Guidance Note on Death Benefit Payments and complementary Policy Proposals to Support Improved Consumer Outcomes.

The guidance is the next step in a continuous improvement in service delivery, setting clear expectations for regular, transparent communication with beneficiaries. It ensures that beneficiaries stay informed about their claims, transforming the death benefits process into a supportive experience rather than a stressful one. By setting out clearer expectations for communication, super funds can provide greater peace of mind to Australians during difficult times. Our members – super funds and the critical service providers that help them do their work – are fully committed to delivering on these expectations.

ASFA CEO Mary Delahunty. Picture: Aran Anderson

It’s worth pointing out that some death benefits are not straightforward. Paying them out can involve two separate decisions: one is about the super in the fund and the other about the insurance policy attached to the fund. Add to this some unusual elements, for example, that super is not a part of an estate, and it gets complex very quickly.

Because super is designed to provide an income in retirement for the member and the beneficiaries, on the untimely passing of the member, the Trustee (the people running the fund) have to make sure the proceeds still go to a beneficiary.

This can take time and be frustrating – we need to communicate this better. But making sure we get it right is crucial.

There are frustrating quirks outside our control as well. ASFA’s policy proposals recommend several reforms aimed at streamlining the death benefit claims process and empowering members with greater choice and control over how their benefits are distributed.

A notable recommendation is the introduction of electronic signing and witnessing of binding death benefit nominations and renewals. This measure would allow members to update their nominations securely and efficiently, eliminating unnecessary paperwork and delays.

We also encourage greater collaboration between government agencies and superannuation funds to help locate beneficiaries, particularly in cases where communication is challenging, such as in remote areas.

And a streamlined approach to death certificates is urgently needed, as each state and territory has a different certification process, which adds unnecessary delay.

While much work has been done, much work remains. We know this, and we are committed to getting it right.

Super holds a special place in Australia. We are a compulsory product and as such are rightly subject to high expectations in every area – transparency, duties and of course – service. We relish the trust that Australians place in the super sector to grow and protect their retirement savings. And, it must be said, we do a good job of doing just that. The average MySuper product return over the last 10 years is 7.3 per cent.

At ASFA we regularly host delegations from other countries who want to learn how we have managed to grow this retirement pot of money into something which is currently saving the federal budget $20bn a year in age pension payments, and materially improving the lives of millions of retirees.

Our response right now reflects the broad commitment to raising service standards and improving responsiveness, particularly over death benefit payments.

ASFA’s comprehensive guidelines and policy proposals provide a clear roadmap for superannuation funds to enhance their practices, ensuring that beneficiaries receive the support and communication they need during difficult times. By embracing these recommendations, the industry can foster a more compassionate, efficient, and trustworthy system that truly serves the best interests of all Australians.

Mary Delahunty is CEO of the Association of Super Funds of Australia.