Pension Confusion, Complaints Surge, and Australia’s A+ Retirement System

So here's a question.How many Australians actually know what an account based pension is?G', day, It's Sarah Penn and this is that Super Show.Today, Neil and I break down the curious confusion over pensions.We dive into the super complaint surge debate, early access for dental drama, and finish with Australia scoring an A retirement system rating.Let's get into it.

Welcome to that super show, the podcast where we talk about all things super from the inside.I'm Neil Benson, Chief Product Officer at Chandler cx.

And I'm Sarah Penn, CEO of Mayflower Consulting.Each week we unpack what's changing in the industry, what funds are wrestling with and how tech and regulation are shaping the landscape.

Sometimes we bring in expert guests, but mostly it's just us having a real conversation about how super is working and what could make it even better.

Let's get into it.

How are you?

Hello Neil.I am very well.It's been fun hanging out this week at the Engage 2026 IBRC conference.

Well, what a thanks.First of all, because you saved my life on Tuesday morning,.

Who knew that Coca Cola is the is the solution to a medical ailment?But there you go,.

It was Pepsi Cola.It was the choice of a new generation.So I got a piece of lunch stuck in my throat and Sarah dragged me over to the bar and forced me to drink some Pepsi.And the bubbles, the sugar and the caffeine you reckon helped me get the food down and yeah, prevent me from choking a couple of hours is in agony.And thanks Sarah for saving my life.I missed the rest of the.Conference, but.Yeah.

Well, love to hear some.

Of your thoughts on the highlights from the Engage 2026 forum.How was.

It?Yes, it was great.I had a great time and if you want to see what the full range of.Everything I was posting on LinkedIn during most sessions, so there's a bit of a full rundown there.Probably one of my biggest takeaways from it is that your average punter does not know what an based pension is.

I think it was dropped that one.

Cannava.Yeah.So thanks.

Anthony for sharing that.

Yes.And.

A contrary.

To pension, it is an awkward phrase to me.I'm sure we can go.

Up with a better phrase.But yeah.

Oh yeah, it's ridiculous.Fascinating to.

Think that most people don't know.

What that is.

Yes.And in fact, if you have an advisor, 43% of people with an advisor knew what an APB was, but only 18% of unadvised members knew what an APB was.And that Rises, but only into 30% in the above 65s.So yeah,.

I would have thought that more than 30% of people 65 and older already have an account based pension.And Anthony's stats show that they don't even know what that is.

Yes, I think it's probably a case where both of those things are true.Well, also because what super funds call an account based pension is different as well.Some of them call it a retirement income, some call it income stream, some call it a pension or an account based pension.The name of it, like, you know, super fund name pension or whatever.So the fact that they're all technically account based pensions but all called different things probably doesn't help the cause either.And then in the very last session actually of the day or the conference that I chaired, which was three actual members to talk about.Super.Which was very entertaining and so many questions from the floor.We could have kept going for hours, we had to finish.But one of the people on the panel spoke about how her, her partner who is in his late 60s, didn't believe her when she told him that super funds actually had a, their own pension.And eventually he said, no, there's only one pension, there's the government pension.I don't know what you're talking about.And then he went and quote, fact checked her and had to come back and go, oh,.

Oh, good lord.Yeah.So we've got a long way to go with education and even just the naming of things, it's hard.

Yeah, I know.I mean, how are we going to, how are we going to flog any annuity products people if two thirds don't even know there's such thing as a. Oh my God.Anyway, is.

There a, is there a proper name, is there like a statutory name for these things?Is an account based pension?The one that's.

It is account based pension.Yes, yes.

Okay.So that's where that comes from.Good lord.

Yep, yep,.

Yep.Well, it was a fascinating conference.We also had AFKA there presenting an update on the complaints.Sarah?

Yes, I.

Think they've been generally trending down for a couple of years.So we're getting on top of complaints.Isn't that the latest update?

They've gone up 45% in the last year.

What?

And then actually he did have some new stats for the.Just the quarter that's just finished and they are steady.So they haven't gone back down again.So it's not like last year was an aberration.

Yeah,.

Yeah.So it's hard.Right, because the total Complaints for Super were 8755 for the year to the end of June 2026, which is not a huge number.Like if you do that as a proportion of adults in Australia, there's about 14 million adults in Australia who are likely to have a Super account.It's a tiny, tiny percentage.But I think you can't ignore the fact that that number has gone up 43% since the year before.So yeah, last year there were by my calcs, just a bit over 6,000 complaints and the year just gone, there was 8,755.So that's 2,600 additional complaints and most of them are about delays in claims and service and denial of claims.

Is it all just down to the Shield and First Guardian debacle or is it more to it than that?

No, no.Of the eight and a half thousand, only 570something were SHIELD and First Guardian.

Oh wow.

So it's not actually a big proportion at all.Most of them are to do with claims and service.I don't know, we've just, we've still just got a long way to go, I think.And so much of it comes down to communication.There was another really interesting session around IDL complaints because don't we love a three letter acronym?Oh, hilarious.So I heard you can three letter acronym at tla so you can actually refer to them.So yet another TLA which is idr and then when it goes to AFCA it's an edr cause it's external dispute resolution as opposed to internal.But it was interesting in the complaints discussion, how many people are using AI to write 10, 20 page legal and I use legal inadverted commas, missives about whatever their issue is.

Yeah.For a lot of irrelevant case law references and cases from other countries and all sorts of things.

And you were saying you saw similar on Reddit as well, which is Reddit is the source of all knowledge.

Well, so there was a, there's a really unfortunate case there.There was a Redditor who posted about his wife passing away and her super fund denying both a TBD claim and a death claim.I was like, well how can she deny a death claim?That poor moments passed away, left her husband behind and yeah, so he had tried to dispute the claim rejection with a 20 page AI written letter and was just getting back a 50 page lawyer response.You know, the super funds obviously not using AI to, to write their response, but they're having to read the whole thing and rebut each point individually.And of course that Just escalates the whole thing.

Yeah, it certainly does.I, I have a real thing about good news in writing bad news on the phone.

Yeah.

And I think complaints are just such a good example of that.Like, especially when people are using AI to write God knows what.Like before you even get a lawyer to start going through every single point and the deciding whether or not it's relevant, case law and writing some commentary, yada yada, yada, just ring the poor bugger.So I'm really sorry you're having a hard time.Let's talk it through and see what we can do.

So long way to go.I think the government's still on the verge of announcing their service standards for superannuation.I think that a lot of that's going to focus on claim handling.Looking at your slide here, the delays in claim handling up 35%, service issues up 38%, denial of claims up 80%.I wonder if a lot of that.There's been a huge rise in the number of mental health claims both on TPD and income protection.And I'm wondering if that's the source of a lot of additional complaints as well.Because it's such a gray area, it's such a hard area to make a judgment on whether somebody has a mental health issue or impairment or disability.It's a conundrum.I don't know what we're going to do to solve it, but hopefully we can get on top of some of these simple claims and improve the service standards.

Yes, I think so too.I actually wonder if the denial of claim ones also.Because these days, if your claim is denied, going to AFCA and having another go at it is just.

Perfect.

Well, it's par for the courses, but kind of like if, like if I had a friend who had that happen to them, my advice to them would be to call afca.Sorry, all the super funds who are listening to this thinking, oh my God, Sarah.But you know, your best chance of getting a.Getting a different outcome is to contact AFCA and at least have a chat to them about it.And I know from the one time I called AFKA actually about a car insurance issue, they were very good.They were friendly and polite and helpful and did their best.So their customer experience is actually pretty good.

Yeah, it's reasonably good.I don't think.They don't really have a reputation for siding with consumers on every issue.

Not at all.They find about 50, 50 for the consumer versus the product.So it's certainly not just one way or the other.Yes.

So we have a new ombudsman for superannuation at Aafka.

We do.

He was presenting at the conference with Heather Gray, who was the previous Ombudsman for Super on one of the early episodes of this amazing podcast.

Yes, indeed we did.So now it's Paul Woodburn, so we should see if we can get him to come on.He presented very well, I thought.Paul, if you're listening, we have to get you on the show to come and talk through some of the things and also what they would like to, from Afka's perspective, a lot of it, as he said, and Heather has said before, does come down to communication and I think the 50 page rebuttal to the 20 page AI letter is not good communication.Sorry, anyone?

I notice Taylor has a new role.She is an advisor to the Consul at Hesta who they turn to to help improve their service standards for members.So they have some extra knowledge.

Very good.

Heather is advising them.So good luck on that new gig.

Yes, Hester's very lucky to have her.

Moving on.We've got a couple of articles here about early access to superannuation.Not the political kind that some political parties have announced recently, but we're talking really here about the current scheme where you can get early access to superannuation under compassionate grounds.There's also a financial hardship claim type as well, which doesn't seem to attract the same amount of attention.It's really the compassionate grounds where there's a lot of judgment and subjectivity as to whether or not a claim is going to be approved.But the stats again are fairly frightening in terms of volumes.The ABC had a good article here with some of the stats over the last five or six years.Number of applications have doubled, number of applications approved have also doubled.The amount of money that's been approved has tripled.And.Yeah, what do we make of this?What are these compassionate grounds claims all about?Sarah?

Oh, I'm, I'm very torn, to be honest.I think if you, if you really don't have any money and you have some kind of horrible dental situation, especially with teeth because they're so highly linked to, you know, cancer and dementia and a whole bunch of other stuff.If your teeth are bad, if you have no other way of getting it than getting, getting your teeth sorted out, then like spending 20 years with buggered teeth before you can get your super to fix your teeth.

Yeah.

Just does seem like a really, really poor outcome.So, yeah, it's, it's tricky.I think given our current situation where Dental is not covered under Medicare but everyone has to have super.It's no wonder that dental is the most popular reason.On the medical front apparently there's been a 13 fold increase since 1819.There was 892 million.So nearly a billion dollars taken out in 2526.I do think though this is one of those ones where and the same with just general cost of living issues is that at a broader societal perspective we aren't doing well enough at keeping real wages up with inflation and so we're heading towards already sort of already have, depending how you look at it.And an underclass of people who are working really hard in full time jobs but not able to make ends meet.

Yeah,.

And a good retirement's great, but a rubbish life until that point, that just doesn't seem like good policy.

I was digging into this expecting to hear all sorts of horror stories about poor advertising practices, dodgy doctors helping people fill in spurious claims.And there is a little bit of that at the fringes.There are, I think there were $1.5 million in penalties handed down last year, which is drop in the bucket to dodgy medical practitioners and others who were roaring the system.But by and large these are people struggling who are at the end of their tether.They've got no other source of funding and they're turning to their super.And I think a lot of them aren't retiring with anywhere near the transfer balance cap.They are folks who are struggling and they don't have any alternative.And it's not like they're going to have a huge pension pot at the end of the day anyway.These people are going to be relying on age pension in retirement and so giving them a better quality of life before retirement.Yeah, it's hard to argue.So I become more and more compassionate with their plight.Compassionate ground claims.

Yeah, it is really tricky.I think, I do think though that fundamentally we need to look at making sure that real wages keep pace with inflation and that minimum wages are high enough and all that sort of stuff so that we don't end up in a situation which we've now got where people do have a reasonable pot of money that they can't touch until they retire for very good reason.But on balance it's not getting them, it's not getting them a good outcome.I do think some of it is very subjective as well.So some things I think are like it's a spectrum, as these things always are.At one end, if someone is in terrible pain and has horrible dental issues and the only way they can fix it is to use their super, then do it.

Yep.

At the other end, using your super for a boob job.Not so convinced.

Yeah.And.

Then in the middle, we've got like, like ivf.I think if you've used your entire life savings and you still haven't got a baby and now you want to use your super to have another few goes at getting a baby, I understand how absolutely desperate people are, but there's still a decent chance you're going to end up with no super and no baby.

Yeah.So.

I'm not sure about that.Yeah.

And there's the tax position of all these claims as well.So you do pay a kind of punitive tax rate when you have to make a grants claim.And the ATO handles all of that.I do wonder if we as a country, we need to consider bringing dental under Medicare so that people can get decent dental care when they need it without having to fork out thousands of dollars out of pocket.Like you said, it's only in the last kind of 10 or 20 years.I've been researching how much of our health relies on good teeth and good oral hygiene and all those things.All the microbiome that starts in your mouth feeds your gut.Yeah.So we're learning a lot about that and the importance of good dental hygiene.And why do we exclude teeth when all the other parts of your body all included tooth.

That's kind of hilarious, isn't it?It's like it was everything except fingernails or something.He's like, what?But also over the time frame, that is the same time frame that real wages have dropped.

True.

So prior to then, people could afford to get their teeth fixed as part of their just general cost of living, and now they can't.So it's kind of the double whammy of knowing how much more important teeth are and people not being able to pay for it.But this is supposed to be a super podcast.

Yeah.I remember selling our car and I got seven and a half thousand dollars for the secondhand car.I was really pleased.And my wife came home the next day with the orthodontist bill for my son, seven and a half thousand dollars.And I just converted a big lump of metal into lots of small, tiny lumps of metal.The same price.Yeah.Dental costs are shocking.Moving right along.

Yes, moving on, Moving on.Right.

What else do we talk about?We have some great news.In fact, the Australian retirement system has been judged by the in the annual Marsh CFA Institute Global Pension Index, where we had Been bouncing around in the 70s.We have now scored 80.6 on their index, which has put us into an A grade rating for.For the Australian retirement system.

Oh, I know.Well.

Done.

I thought that was fantastic.I'm also slightly stunned that we didn't get an A before anyway.

Yep.

But as I said, we were a B plus for the last five years.How very frustrating.One was studying very hard, Neil, and still didn't get an A.

Homework and everything.

I know.Apple on the teacher's desk.Every day.

This System looks at 50 different indicators covering adequacy, sustainability and integrity of the system.It admired the fact that our GDP burden for the age pension is now just 2.3%, which I think we covered in an earlier episode, and it falls to just 1.8% by 2066.It's 10% in other OECD countries.

Oh yeah, yeah, totally.Yeah.

The French don't seem too happy about their costs of their public services at the moment.They're spending so much on pensions that they can't afford anything for education and they're taking to the streets.Like we don't have that here.So.Yeah.

Yes, we're very lucky.I think it's having spent the last two days at a conference where we've been going through everything that's wrong in super.In minute detail.Well, not everything, but really just on one particular area, which is member engagement.It's very easy to forget that actually in Australia we are so, so lucky to have the system that we do and the difference that it is making to our overall government budgets and everything else by having it there.And I guess it's really, it's the thing of.Because it's a defined contribution scheme and because the SGC is high, it means that the cost is spread over each individual's working life rather than just waiting until they retire and then having a massive impost.And because it's spread over that, that, you know, the power of compounding, which is the eighth one in the world, the whole system.And each individual person in Australia who's got super is getting all the advantages of compounding.Yeah.And it does make an absolutely astounding difference.You know, people are retiring now, I think on average about 400k or something in their super.I mean, that's amazing.

Yeah.Do you think there's a chance that the current 12% SGC is too high?Are we going to see people with too much money in retirement in 20 or 30 years time and look back and go, actually, yeah, maybe that setting was A bit much and people are going to have awesome retirements but they could have done with more money in their pocket during their working career.

Well, I think this is sort of back to that earlier discussion around how do we make sure that real wages keep pace with inflation so we don't end up with a very skewed system where people have a rubbish working life and then have enough money in retirement.That does seem kind of stupid.Yeah, you definitely want to have it more balanced out.But I hope that the 12% doesn't drop.I know there are people running around saying it should go back to 9 or 10%.I do think it's though, if you look at who's saying that, it's all the people in super who work in super who have tons of money and have very high incomes and have lots of money in their super and probably put in extra early, yada yada yada, rather than more the average punter who doesn't even know what an account based pension is.Yeah,.

Well, well done team.I think getting an A plus.

Yes.

No mean feat.And yeah, congratulations to everybody.Do work hard on behalf of all the members in the system to, to give us that rating.So a good news story to end on.Sarah.That's.That's amazing.

I think so.I mean because this is the thing at the end of the day, we are so lucky to live in this country and, and super is what makes it, you know, he's a big part of that.

Yeah.So well done everybody.

Yes.On that note.Yeah, yes.

Thanks Sarah.Catch you next time.That super show.For folks following along at home, remember to visit our LinkedIn page and you can catch all the latest episodes there.You can give us a comment and if you want to visit the website for this show, it's thatsuper show and you can get all the links to all the articles we cover, links to upcoming conferences and events that we're going to be doing and follow us there as well.

That is 100% right.

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Indeed.Yes.Thanks Neil.See you soon.

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