Australia’s $4.1 trillion superannuation sector is set to undergo a major overhaul, with the federal government introducing mandatory service standards aimed at addressing poor performance and delays in death and disability payouts. The reforms, which have been described as “long overdue,” seek to improve member outcomes and ensure greater accountability within the industry.
Slow Processing of Death Benefits Under Scrutiny
The new measures were announced by Finance Services Minister Stephen Jones, who emphasized the need for urgent improvements in the processing of death benefits and insurance claims. These delays have been a recurring issue for many Australians, with members and their families often left waiting for months during critical periods. Jones has repeatedly called on the sector to improve, stating that current service levels are “nowhere near where they needed to be.”
“[The] 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,” Jones said.
The reforms aim to address these gaps, ensuring that members receive the support and payouts they are entitled to in a timely manner. Improved communication with fund members is also a key focus of the proposed changes.
ASIC Cracks Down on Non-Compliance
The Australian Securities and Investments Commission (ASIC) has been actively targeting funds that fail to meet their obligations. In November, the regulator launched legal action against Cbus, an industry super fund, over allegations it had delayed processing over 10,000 claims for death and disability payments. ASIC estimates that these delays resulted in financial losses totaling $20 million.
Deputy chair Sarah Court highlighted that these issues are not isolated to a single fund but represent a “broader issue” within the sector. ASIC has reportedly contacted several funds to address similar concerns, signaling a wider crackdown on poor customer service practices.
A Push for Accountability and Transparency
The introduction of mandatory service standards aims to enforce stricter compliance across the sector, ensuring that funds are held accountable for their performance. The reforms will be supported by legislation, which is expected to include penalties for non-compliance. Jones made it clear that funds would need to significantly improve how they engage with members and handle claims processing.
This latest move reflects growing frustration among regulators and the government over the superannuation industry’s failure to meet member expectations. While super funds manage vast sums of money on behalf of Australian workers, systemic issues with communication, transparency, and service delivery have undermined public trust in the sector.
