Big super’s back office is a black spot that keeps letting retirees down

ART left about 20,000 investors waiting days for payments late last month.

Australia’s biggest super funds stand accused of double standards after letting retirees down with unreliable payment systems.

Just months after Unisuper members endured a major outage, Australia’s second biggest fund, ART, has now experienced “tech failures” that left pensioners without money for days.

At the same time, big super funds are increasingly lecturing sharemarket-listed companies on governance. ART, which has the single largest administration costs of any fund in the sector, earlier this year said it would cut all thermal coal investments. The fund also said it had a target of portfolio alignment with “priority companies” to become net zero.

Yet despite spending enormous sums on administration – in this case $656m in the last reported year – it seems ART has not sufficiently invested in its own back office.

With more than $300bn under management, ART left some 20,000 investors waiting days for payments late last month after so-called “intermittent technology outages”.

It appears the fund did little to publicise the incident and only affected members were informed directly.

Earlier this year, the Unisuper fund also experienced a serious outage which left its 600,000 members unable to access information. The Finance Sector Union blamed problem on the fund’s decision to outsource key operations.

Investors and consumers care little for the technical explanations of cock-ups at big super. They simply do not want these incidents to occur at all.

In a pattern that is starting to repeat, the ART incident came to light through social media platforms; in this case it was on the discussion site Reddit where furious ART investors vented their complaints – which included the technology outage along with more persistent issues around delays in switching options or delays in rollovers to SMSFs.

In May, Unisuper’s outage also spurred wide discussion on social media platforms.

It is not just customers who are complaining loudly about poor standards at major funds; financial advisers have also been airing complaints aimed at funds such as Hesta and Hostplus.

On the Ensombl chat forum – which is for financial advisers – one contributor says: “I have just been 10 rounds with Hostplus trying to get a name change (on a fund). It took literally months.”

As The Australian has reported in the past, “rollover rejections” now appear to be rampant across the super system with top players such as Hostplus, Aware, Hesta and Russell Investments accused of “deploying a range of strategies to delay releasing super money”, according to specialist accountancy group Freedom Financial Solutions.

Certainly, system failings at super funds do not get the same public attention as cock-ups at airlines or supermarket groups, but this is changing quickly as the retired population grows larger.

Prudential regulator APRA is currently prioritising super fund spending that is “deficient and questionable” – it should also take a look at how big super is repeatedly having systems failures and making such situations all the more alarming by falling way behind the standards that investors have come to expect.