The recent penalty imposed on Cbus for delays in paying death and disability benefits has raised important questions about compliance, member protection, and the differences between industry, retail, and SMSF funds. Here’s what you need to know.
What Happened?
Cbus (United Super Pty Ltd) was found guilty of breaching obligations under the Corporations Act by delaying death and TPD benefit payments for thousands of members. These delays sometimes exceeded 12 months, causing financial and emotional distress.
Key Facts
- Over 7,000 members and beneficiaries affected.
- Civil penalty: $23.5 million.
- Compensation: $32 million to affected members.
- ASIC legal costs: $500,000.
- Fine paid from trustee risk reserve; no immediate increase in member fees.
Who Pays the Fine?
Industry funds like Cbus pay penalties from trustee risk reserves funded by member fees. Retail funds, on the other hand, typically pay fines from corporate profits or shareholder funds, not member accounts. This means your money remains protected.
Why Retail or SMSF Funds Add Value
- Retail funds absorb penalties through corporate profits, shielding member balances.
- SMSFs offer full control and transparency, allowing members to manage compliance and investment decisions directly.
- Both options provide greater assurance that your retirement savings are not used to cover regulatory breaches.
What This Means for You
This case highlights the importance of choosing a fund structure that prioritizes member protection and timely service. Retail and SMSF options can offer peace of mind and control, ensuring your money works for you—not to cover penalties.
At HTA Wealth, we remain committed to transparency, compliance, and delivering exceptional service to all our clients.
If you’d like to chat about your super, our team is here to help.
Ben Seeger, Director – Wealth, HTA
