Australian Regulator Sues Pension Fund Over Death Benefit Delays

(Bloomberg) — Australia’s regulator has filed civil penalty proceedings against one of the nation’s largest pension funds, Cbus Super, over lengthy delays in processing thousands of death benefits and insurance claims. 
Cbus, with A$94 billion ($61.4 billion) of assets under management, is alleged to have taken more than 12 months to process some of the claims and has failed to “act efficiently, honestly and fairly,” the Australian Securities and Investments Commission said. The regulator alleged the processing delays from Sept. 2022 to Nov. 2024 impacted over 10,000 people with an estimated A$20 million in financial losses.
The building and construction industry super fund, which is already facing a separate external review over ties to a union embroiled in allegations of misconduct, also failed to properly assess the “scale of the impact to members and claimants,” when the issues were raised by a third-party administrator, ASIC added. 
“Delays in claims processing like those alleged by ASIC cause real harm to families who may be relying on the payments to meet critical expenses,” ASIC Deputy Chair Sarah Court said in a statement. “This adds to difficult personal circumstances, whether grieving for a loved one or dealing with severe injury or illness.”
It’s the regulator’s latest broadside over Australia’s fast-growing A$3.9 trillion pension industry over concerns that the nation’s funds need to do better by their customers. ASIC last year sued AustralianSuper, the nation’s largest pension fund, alleging that it charged members fees on multiple accounts that should have instead been merged. The Australian Financial Complaints Authority is reviewing the way the industry handles death benefits. 
Cbus said it was “sorry that delays have been experienced in the processing of insurance claims made by our members,” and it had cooperated with ASIC during its investigation, establishing a compensation program for affected members. Cbus will invite ASIC to engage in alternative dispute resolution processes to avoid protracted litigation.
“We apologise to our affected members and their families without reservation and promise to do better,” the pension fund said.
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