Home / Superannuation / Super funds’ poor servicing exacts heavy toll on seniors

Financial Services Minister Stephen Jones is finally addressing the retirement industry’s elephant in the room – how super funds continually fail to meet the expectations of members once they are in the pension phase.

Introducing mandatory and enforceable service standards on large superannuation funds is urgently needed to address the poor service they inflicted on members according to Cassandra Macolino (pictured), head of wealth strategy at the Adelaide-based advice firm Stellan Capital.

Funds hide behind legislative requirements to create unnecessary barriers, delay rollovers under the pretext of missing information and often subject clients to long wait times, she tells The Golden Times.

“The worst bottlenecks are death penalty payments that are often severely delayed, often exceeding six months due to understaffing. With rollovers, it’s more likely their delaying tactics are motivated from the benefit they derive from holding on to the assets longer.”

Macolino’s critique of poor member servicing reflects a widespread view across the industry in the wake of the announcement by Assistant Treasurer and Financial Services Minister Stephen Jones that the government was taking action to raise the bar for member servicing in superannuation.

Jones conceded that there had been some areas where some funds had failed their members, with the new standards to initially target the critical areas where the complaints data showed the greatest need for improvement such as death benefits, insurance claims and clear, respectful and accessible communications with members.

This government initiative to improve member services in superannuation was long overdue, particularly as it often affected seniors, said Patricia Sparrow, chief executive officer of the seniors’ advocacy organisation COTA Australia.

“There’s no question that the standard of service older Australians, and indeed Australians of all ages, are receiving can be significantly improved. People deserve high-quality customer service throughout their superannuation experience, but too often we hear reports that it’s simply not happening.

“As our population ages, we need to be looking at measures to ensure that people can live the dignified life in retirement that they deserve. Super funds need to ensure they are communicating clearly and in a timely way with their members all the time, to assist in planning and preparing for retirement.”

Sparrow said improving outcomes during vulnerable and difficult moments in people’s lives was especially important.

“Compassionate, clear, high-quality service is really the least we should expect from our superannuation funds every day but especially during our most vulnerable moments such as when we’re waiting for the timely payment of death benefits.”

CPA Australia also welcomed what it called “a long overdue” initiative, noting that while there were standards for some superannuation issues, the most sensitive of queries – death and disability – have been sidelined.

“Insurance and death benefits are key features of superannuation that have routinely been overlooked. This was a welcome reform to important and necessary features of superannuation in Australia, said Richard Webb, CPA Australia’s superannuation lead.

“The community has the highest expectations around the release of superannuation benefits at the time of death, illness or injury, and rightly so as these are serious events. It’s crucial that information at a time of death or disability is completely clear, with minimal delays. Sensitivity during this time is of upmost importance.

“Ensuring that this process has robust service standards in place ensures that fund members know exactly what to expect from their fund – and what their fund expects from them – when one of these life-changing events occurs.”