Australia's corporate watchdog has urged Australians to take one crucial step to avoid a major mistake with their superannuation, calling the current situation a 'grave concern' for millions.
In a grim update, the Australian Securities and Investments Commission (ASIC) warns that superannuation funds are failing to pay out death benefits in a timely manner, with some claims taking years to process.
Alarming Delays in Death Benefit Payouts
ASIC commissioner Simone Constant told NewsWire that the service grieving Australians receive from super funds is a 'grave concern' to the corporate cop. 'We are saying to members, think of yourself as customers and demand service level and support consistent with being a valued customer,' she said.
The latest release is part of an ongoing series by ASIC monitoring how superannuation funds handle death benefit claims, following complaints from the public. Some improvements have been made, but ASIC says ongoing weaknesses in the death benefit claims handling practices of straggling superannuation trustees risk undermining confidence in the industry at a time when the population is ageing.
Ms Constant warns that in some of the more egregious cases, members' loved ones will wait years to get their money while funds make them jump through hoops. 'They are doing things like having to repeatedly provide evidence of death and having to go back to the same hospital where they lost a loved one to get elements of evidence,' she said.
Lack of Tracking Forces Families to Re-Explain Cases
Ms Constant said a lack of tracking from funds means members are often forced to re-explain their case to get money that is ultimately owed to them. '(Members' families) might be left behind and not just in terms of a loss of a loved one but in terms of their responsibilities. We have seen grandparents, for example, caught up in this who have responsibilities for the grandkids after they lost their own child.'
'The fact funds haven't stepped up and into this in a comprehensive, complete and accelerated way is quite alarming to us,' she added.
What Australians Should Do
Households are being urged to make the process easier for their families by getting a valid binding death benefit nomination. According to ASIC, nearly 90 per cent of members do not have a binding nomination, making the process harder for grieving families.
Of those that have a nomination, around 31 per cent have a non-binding arrangement, while only 6 per cent have a non-lapsing agreement. ASIC warns that failing to make a binding death benefit nomination could result in a preferred beneficiary not receiving the death benefit in a timely manner, or potentially not at all.
'Get yourself familiar with important parts of the processes, such as making a valid binding death benefit nomination, as it will make it so much easier for those you leave behind,' Ms Constant said.
'Many assume their death benefit will simply follow their estate or their will, and that is not the case. If your fund does not support you in a simple and effective way to make the valid binding death benefit nomination and get that in order, then think about yourself as an active customer that can make choices as to whether the fund is right for you.'
