Australian Super under investigation for delayed death benefit payouts – why this is a much broader industry issue.

Recent headlines reveal that Australian Super is under investigation by the Australian Securities and Investments Commission (ASIC) for delays in processing death benefit claims. Last November, the fund announced that it would compensate approximately 7,000 beneficiaries with $4.2 million for claims that exceeded its internal processing target of four months. While the fund has since apologised and begun reimbursing those affected, questions remain as to whether all delays have been resolved.

This development is not isolated. Similar issues have been reported with other funds such as CBUS, whereby legal proceedings have been initiated over delays affecting both Death Benefits and Total and Permanent Disability (TPD) claims. The influx of court proceedings against life insurers squarely indicates that thousands of TPD and death claims have experienced processing times well beyond the expected timeframe, with some claims taking over a year to resolve. Such delays can have a devastating impact on families, particularly when a primary income earner passes away, or is unable to work due to injury or illness, leaving dependents in financial distress.

A death benefit claim is a request made to a superannuation fund by the beneficiaries or legal personal representative of a deceased member, seeking payment of the deceased’s superannuation account balance and any associated death insurance benefits. These claims provide critical financial support during an already difficult time, helping to cover expenses such as funeral costs, outstanding debts, and day-to-day living expenses.

Death benefits are typically paid to:

• A dependant or multiple dependants of the deceased, which may include a spouse or de facto partner, children (of any age), or anyone in an interdependency relationship with the deceased.
• The deceased’s legal personal representative (e.g., the executor of their estate), for distribution in accordance with the deceased’s will.
• In some circumstances, a non-dependant may also be eligible, subject to the specific rules of the superannuation fund’s trust deed and insurance policy.

For the purposes of these claims, a “dependant” is defined as someone who, at the time of the deceased’s passing, had a close personal relationship with the deceased and relied on them for financial or domestic support. In cases where the relationship is not formalised by marriage, such as in a de facto partnership, establishing eligibility might require additional evidence – such as statutory declarations, shared bills, or other documentation – to prove the relationship.

A binding nomination is a legally executed document where a super fund member specifies how they wish their death benefits to be distributed. If a binding nomination is in place and valid, the Trustee of the superannuation fund must distribute the benefits according to the member’s instructions.

It is important to note that a binding nomination will typically expire after a set period (usually three years) and must be reviewed periodically. In the absence of a binding nomination, the Trustee has discretion in determining the beneficiaries based on the fund’s trust deed.

The prompt payment of death benefits is crucial. Delays can compound the emotional and financial strain experienced by families during their time of loss. When funds are delayed, beneficiaries may struggle to cover immediate expenses such as funeral costs, outstanding debts, or everyday living expenses.

The inconsistency in claims processing timeframes across various superannuation funds underscores the need for clear, enforceable customer service standards to ensure that beneficiaries are not left waiting during critical moments.

At Gordon Legal, we specialise in TPD and Life Insurance / Death Benefit claims. If you or a loved one has experienced delays in receiving a death benefit, or if you are unsure of your entitlements, our experienced team is here to help. We can provide you with expert legal advice and guide you through the claims process, ensuring that your case is handled with the urgency and care it deserves.

Our no-win/no-fee approach means that you can seek our assistance without worrying about upfront costs, allowing you to focus on what matters most – that is, supporting your family during difficult times.

If you have questions about your death benefit claim or need assistance with any aspect of your TPD or life insurance matter, please contact us at Gordon Legal. We are committed to ensuring that you receive the financial support you deserve.

Loredana Trimboli (Senior Associate)