AustralianSuper’s backlog of unpaid death benefit claims blew out by thousands of cases in the years after the COVID-19 pandemic amid failures in the fund’s outsourcing arrangements, including “highly inefficient” work processes, the corporate watchdog says.
The Australian Securities and Investments Commission (ASIC) took the country’s biggest super fund to court in March, saying it delayed the processing of nearly 7000 death benefit claims.
AustralianSuper was sued by ASIC in March over alleged failures in how it handled death benefit claims.Credit: AAP
ASIC is alleging the $365 billion fund breached an obligation to provide financial services efficiently, honestly and fairly, and that it also fell foul of obligations to pay members’ death benefits “as soon as practicable”. The super giant has not yet filed its defence.
In its statement of claim filed with the Federal Court, ASIC has laid out in detail how the backlog of claims ballooned, and how AustralianSuper responded to the growing problem.
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ASIC’s case also says AustralianSuper failed to take action to stop charging monthly administration fees from the deceased member’s account during periods of “unreasonable” delay.
An AustralianSuper spokesman said that previously, when members died, administration fees were charged for the services of continuing to manage and administer their account. This approach changed in October last year. Now, the fund will invest a deceased member’s account in its cash option when the fund is informed of their death, and administration fees are no longer charged.
ASIC’s statement says that from May 2020, the firm used by AustralianSuper to process death claims, Link, started experiencing delays in its handling, and in subsequent months, a plan to deal with the backlog was developed.
In November 2020, a committee within AustralianSuper that reported to the fund’s board was informed about the backlog, and by early 2021 the backlog had worsened. In April 2021, Link told the fund there were 700 to 800 claims in the backlog, but a “recovery plan” said the fund expected to have death claims processing return to normal levels within months.
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