Grieving families could be pushed towards asking banks to pause mortgage repayments as super funds delay some death benefit payouts.
Grieving families could be pushed towards asking banks to pause mortgage repayments as superannuation funds take more than six months to release some death benefit payouts.
A follow-up review by the Australian Securities and Investments Commission has sparked calls for mandatory customer service standards after exposing slow progress across the super industry.
Baseline Financial director Damian Medici said delays in accessing money after a death could place households under severe pressure when bills, debts and home costs continued.
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“If the family needs that money to cover bills, debts, mortgage repayments or living costs, then yes, that can be a real concern,” Mr Medici said.
“If they are relying on the payout and they are waiting months for it, that creates a lot of financial stress on top of the grief they are already dealing with.
“For families without a cash buffer, that kind of delay can be very difficult.”
Baseline Financial director Damian Medici warned families could face severe pressure when one income stops but mortgages, debts and bills keep arriving.
Mr Medici said some families could be forced to ask banks for breathing room if one income disappeared before death benefit money arrived.
“People generally do one of two things,” he said.
“Some will panic and try to find a job or replace the income very quickly.
“Others, if they do not have money behind them, may need to go to the bank and ask for their loan repayments to be paused or put on hold to give them some breathing space.
“It comes back to the importance of having a proper emergency buffer. When one income stops, the bills do not stop with it.”
Mr Medici said poor communication from super funds, banks or estate representatives could make it harder for families to plan after a death.
“The biggest issue is not knowing what to expect,” he said.
“If people do not understand the timeline, the process, what documents are needed, what decisions have to be made and when the money might be released, it becomes very hard to plan.
“You have the super fund, the bank, the estate, lawyers and family members all potentially involved at once. A clear process would make a big difference.”
Consumer advocates are calling for mandatory service standards after ASIC found slow progress on super death benefit payout delays.
ASIC’s review shows death benefit payout handling improved by only 3 per cent across the industry.
Large funds with more than $50bn in member benefits improved by 19 per cent, but almost all large funds that improved had already been included in ASIC’s original review or enforcement action.
The review also shows many funds still had not set targets for how long death benefit payouts should take.
Superannuation complaints to the Australian Financial Complaints Authority rose by 29 per cent in 2025.
The Australian Financial Complaints Authority has also raised concerns about systemic issues in super, including poor oversight of death benefit payouts and inaccurate communication that left consumers unclear about the process, time frames and their rights.
Super Consumers Australia chief executive Xavier O’Halloran said grieving families were still dealing with confusing processes, poor communication and unacceptable delays.
Super Consumers Australia chief executive Xavier O’Halloran said the review showed grieving families were still being let down.
“The only super trustees that have shown significant improvement are the ones ASIC has already spent thousands of hours dealing with through the original review or enforcement action,” Mr O’Halloran said.
The consumer group said many funds still had not implemented one of the most basic recommendations: setting targets for how long death benefit payouts should take.
Superannuation complaints to the Australian Financial Complaints Authority rose by 29 per cent in 2025.
Mr O’Halloran said families who had lost loved ones were still being left to navigate unclear systems.
“People who have just lost a loved one are still dealing with confusing processes, poor communication and unacceptable delays,” he said.
“At the same time, complaints across the super sector continue to rise.”
Mr O’Halloran said leaving improvements to the industry had not worked.
“ASIC’s findings show a tinkering-around-the-edges approach by super funds,” he said.
“Leaving improvements up to the industry has clearly not delivered good outcomes for consumers.”
ASIC’s review also highlighted a lack of support for First Nations customers and people experiencing vulnerability.
Mob Strong Debt Help acting director Mark Holden said strict identification rules could leave First Nations families blocked from basic information. Picture: ABC
Mob Strong Debt Help acting director Mark Holden said superannuation was one way First Nations families provided security for retirement or loved ones, but many funds still relied on rigid systems.
“There are many administrative burdens in the superannuation sector that need culturally informed services tailored for First Nations customers and their beneficiaries,” Mr Holden said.
Mr Holden said strict identification rules could leave grieving families blocked from basic information about a deceased loved one’s super.
“This creates uncertainty as to whether you have the right ID,” he said.
“We see a small handful of super funds making an effort to improve their services for First Nations customers, but we should not be seeing this as a gold standard.
“Every First Nations customer should expect their super fund to consider their needs and circumstances.”
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