ASIC has published REP 806 Taking ownership of death benefits: How trustees can deliver outcomes Australians deserve.
The report provides detailed observations from ASIC’s review of the death benefit claims handling practices of 10 superannuation trustees. It identifies better practices, as well as systemic failures by some trustees, resulting in emotional and financial distress of beneficiaries.
A death benefit is the amount of superannuation remaining in a member’s account after they pass away. It may also include insurance proceeds if the member had insurance through their superannuation (insured benefit). The deceased member’s beneficiaries must lodge claims.
The review into the death benefit claims handling practices of 10 trustees revealed:
- many examples of excessive delays and poor service;
- gaps in trustee data and reporting;
- some trustees’ processes and procedures were unclear and inconsistent;
- communication and engagement were often ineffective and insensitive; and
- inadequate support for First Nations claimants and claimants experiencing vulnerability.
There was significant variation in end-to-end claims handling times across the reviewed trustees.
The fastest trustee closed approximately 48% of death benefit claims in 90 days whereas the
slowest trustee closed only about 8% of claims in 90 days. Claims that had a valid binding nomination were processed faster than those that did not. Uninsured claims were slightly faster than insured claims.
ASIC recommended that trustees should:
- track end-to-end claims handling times;
- track both insured and uninsured claims; and
- use meaningful metrics with sufficient granularity to quickly identify and address issues with processing claims.
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Author: David Jacobson
Principal, Bright Corporate Law
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About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.
