An elderly man who had lost his wife to cancer and urgently needed access to funds owed to him to cover an outstanding mortgage had his payment unnecessarily delayed 28 days, causing "significant further distress".
A First Nations woman distraught following her husband's death had to wait 500 days to get approval to access $100,000 in funds he had accrued and was given little support to navigate the process, despite her cultural barriers.
In more than three quarters of death benefit claims reviewed by financial regulator ASIC, superannuation funds were responsible for delays caused by processing issues within their control.
These accounts show the personal toll the industry's systemic claims handling failures are having on grieving families across Australia.
As the sector matures from wealth accumulation to decumulation and faces a growing strain on resources to pay out millions of members with vital funds, trustees are facing a reckoning.
The financial watchdog, which has already initiated legal proceedings against heavy hitters Cbus and AustralianSuper, is putting super execs on notice to shape up.
"Many of the complaints we read were distressing," said ASIC commissioner Simone Constant.
"We saw deep grief, vulnerability, frustration and genuine suffering."
Poor customer service was rife among the 10 trustees reviewed by ASIC, which represent 38 per cent of all benefits managed by super funds.
Funds failed to return claimants' phone calls, dismissed queries from grieving family members or asked them for unreasonable information.
Death benefits refer to the remaining superannuation balance in a member's account after they pass away, which a beneficiary - usually a family member - is entitled to be paid as soon as practicable.
"The money from a death benefit can make a huge difference and each day a trustee delays that payment causes real harm to families," Ms Constant said.
"Trustees need to do better."
While timelines to respond to claims varied greatly between funds, none of them closed more than half of claims within 90 days.
Colonial First State trustee Avanteos was the most timely performer, while Rest closed just eight per cent of claims within 90 days and still had more than half of claims outstanding after six months.
None of the trustees monitored or reported on their end-to-end claims handling times or performance, revealing a gap in oversight.
"At the heart of this issue is leadership that doesn't have a grip on the fund's data, systems and processes - and ultimately it is the customers who suffer for it," said ASIC chair Joe Longo.
"This kind of disconnect is unacceptable in any area of corporate Australia, but in the superannuation sector it is particularly serious, because super affects everyone from the boardroom to the living room."
The report, released on Monday, made 34 recommendations for funds to adopt.
They focused on improving customer service and speeding up response times, better monitoring and reporting, streamlined claims processes, better staff training and removing barriers for First Nations claimants.
ASIC reviewed a mix of retail, public sector and industry super funds, including some of the biggest players in the sector, such as Australian Retirement Trust and UniSuper.
Cbus and AustralianSuper were not included in the review because ASIC chose to prioritise its legal action against them instead.
The federal government has vowed to introduce mandatory standards forcing super funds to pay out death benefits faster and provide better communication to claimants, if re-elected.
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