Many retirees pay unnecessary extra tax by keeping their assets in accumulation mode, despite being eligible to move their savings into tax-free retirement products. But the deeper problem is that retirees who do transition into pension accounts still struggle to spend. Research consistently shows that many Australians die with larger super balances than they had at the point of retirement¹.

The retirement system is complex, relying on the interaction between superannuation, the Age Pension, and housing. CBUS Chief Strategy Officer Bernie Dean says most of the fund’s blue-collar members retire with $150,000-$200,000 yet too few take the obvious path to maximise their retirement lifestyle.

"There's probably still about a third of our members in that 55 to 60, and 65 year-old cohort that aren't aware that we actually have really good, robust long term performance on our income streams,” Dean says.

AustralianSuper Head of Retirement Jacki Ellis says their vision is to provide personalised guidance to every member in the pursuit of helping them live well in retirement, integrating the different pillars of the retirement system – super, the Age Pension, housing – at a household level. She admits that achieving this vision is ambitious.

"We tend to overestimate the amount of change you can generate in a year and grossly underestimate the amount of change that you'll see in a decade," AustralianSuper’s Ellis says.

“Our view is that defaults should be active decision-making and that every member is different and every set of circumstances are different,” says Andrew Gregory, Chief Advice Officer at UniSuper.

State Super CEO John Livanas, whose closed defined benefit membership is in the retirement phase, is sceptical of any approach that seeks to impose a one-size-fits-all solution.

“People’s family circumstances are all very different. Their requirements might each be different. Their sensitivity to risk and their financial needs are likely to be different,” Livanas says.

He argues that the very architecture of the superannuation system, and the visible, personal relationship members have with their money, makes a prescriptive approach counterproductive.

“Every month, members can see their money on their statement. It is real and it is theirs to access. So why tell them what to do with it? Let them make their own decisions. If we break that relationship, they may start to lose faith in the system altogether.”

What ART is calling for, Van Wyk says, is the ability to take a modest but meaningful step: "We want to be able to use what we do know about somebody to provide them with a suggestion on that basis. And that's an enormous step forward, but a baby step away from integrating data with the ATO and all these other ambitious things that people are talking about."

Vanguard Australia Chief of Personal Investor, Renae Smith, also opts for a middle ground.

"Retirement defaults will continue to play an important role, particularly softer, opt-in approaches that guide members without limiting choice. Entry into retirement should remain an active decision rather than driven by hard assignment models."

From a global perspective, J.P. Morgan Asset Management's Daniel Oldroyd describes a model already emerging in the United States where guaranteed-income options are embedded within accumulation vehicles as an opt-in feature.

"It says, if you would like to turn some portion of this into guaranteed income, you can do that. If you do not, it looks and feels like the accumulation vehicle."

Oldroyd also cautions against judging retirement defaults by immediate uptake.

"Utilisation shouldn't be dismissed as a success metric. Adoption of these solutions is a long game – you don't launch and immediately see 100% of members signing up day one. However, the picture looks very different after five years.”

A recurring theme across the interviews is that the opt-in/opt-out debate should not be framed as a binary choice between advice and structured retirement pathways.

Defaults function as anchors – starting points that make the advice conversation more productive rather than redundant. And for members who will never access advice at all, a well-designed opt-in default is the difference between remaining in accumulation by inertia and beginning to draw a retirement income.

Longevity and the product puzzle

Pooled longevity protection can lift spending confidence and smooth income – yet demand remains low, because members give up flexibility and control, and the products are often complex.

The possibility of outliving retirement savings, or longevity risk, is a powerful force shaping retiree behaviour. Most people die with the bulk of the wealth they had at retirement intact, with one super fund reporting that members who died left 90 per cent of the balance they had at retirement⁶.

It is the reason millions of Australians who have enough money to live comfortably in retirement choose not to spend it. It is also the problem the industry has been trying to solve, with limited success.

The dominant product in Australia's retirement phase, the account-based pension, places the entire burden of managing that risk on the individual.

Members must choose their own investment mix, set their own drawdown rate, and make their own judgment about how long their money needs to last. The result, across nearly every interview conducted for this report, is a system that produces decision paralysis.

"Many retirees are underspending, not because of the lack of assets that they have, but because of the lack of confidence in what their income will be and whether that will last," says Giacomo Tarantolo, Head of Retirement Solutions at Acenda Life.

He points to CoreData Retirement Income research that found nine in 10 Australians believe the Age Pension alone will not be enough, while two-thirds say income certainty is one of their top two priorities in retirement. Yet very few understand what guaranteed income products are or how they work.

The account-based pension provides retirees with flexibility, but it also exposes them to sequencing risk – the danger that poor investment returns in the early years of retirement will permanently reduce the longevity of their savings.

“If markets perform really well at the start of their retirement, they're probably never going to run out of money," Tarantolo says. "But if markets perform poorly in those early years of retirement, their money could run out 10-15 years earlier than anticipated.”

CBUS’s Chief Strategy Officer Bernie Dean adds a dimension to the longevity challenge that most industry commentary overlooks: healthcare.

“Many CBUS members who are now 65 or 70 and living in Victoria will benefit from earlier and better cancer diagnostics, improved care, and overall better health outcomes," Dean adds. "And while that's great for our members, it also means their $150,000 in super will need to last longer.”

The affordability constraint 

Not every fund's membership is positioned to benefit from longevity products today – an issue HESTA is grappling with.

“Affordable products that suit lower balance members don’t really exist today, however we certainly have to plan for the future membership, as our fund is predominantly women, and women live longer, a lifetime guaranteed income will become more critical and hopefully affordable,” HESTA’s O'Shea says.

AustralianSuper’s Ellis confirms the fund is partnering with life insurer TAL to develop a retirement income solution. "We have commenced the build this financial year and see this as a really great step forward in our retirement offering for members," Ellis says.

But she is candid about the scale of the distribution challenge. "As much as it's no simple thing to bring a whole new product to market, the actual challenge is getting meaningful take up in these products. Without that, you're not really making a difference."

Across the system, adoption remains marginal. SMC research shows only 6 per cent of retirees currently use a lifetime income product, despite two-thirds of pre-retirees being aware of them⁷.

The scale of the problem 

Super funds are increasingly becoming technology businesses.

"The role of technology is huge,” Aware Super’s Warner says. “It’s about interfacing with the member base in a way that is really flexible and meets them where they are, delivering them help in the way that they need it.”

A coordinated cyber-attack on Australian super funds in April 2025 using previously leaked usernames and passwords found on the dark web specifically targeted pension drawdown accounts. It is part of a global push to target the elderly and cashed-up retirees.

“As the superannuation system matures and shifts from accumulation to managing retirement income at scale, the risk of fraud and scams is only increasing,” Vanguard Australia’s Smith says. “With more sophisticated threats like deepfakes and advanced cyber‑scams, protecting members has never been more critical.”

Expectations are high among the public.

"You become a payment provider when you're a retirement provider,” AustralianSuper’s Ellis says. “Most Australians' expectations around payments are set through their interactions with banks, and superannuation funds are a long way from that seamless experience today."

APRA’s CPS 230 – which went live on July 1, 2025 – was designed to strengthen financial institutions’ operational resiliency although surprisingly, only banks were called out to explicitly treat payments as a mandatory critical operation⁸. Super funds’ critical operations encompass investment management and fund administration – pension payment continuity is implicitly nested within fund administration.

ART’s Van Wyk says legacy technology, payments infrastructure, and cyber vulnerability are interconnected risks, which he ranks among his biggest concerns for the retirement system.

“Increasingly, our boardroom is becoming a technology business.”

Conclusion

The super fund that emerges from these interviews is not the one most Australians would recognise today. It is not a savings account with a login and a yearly statement. It is something closer to the institution that a bank once was – the place you go when you need to make sense of your financial life.

Defaults only work if the fund knows enough about its members to construct meaningful starting points. Advice only scales if it is embedded in the retirement experience, not bolted on as a separate service. Longevity products only gain traction when they are woven into an integrated income solution rather than sold as standalone alternatives. And none of it functions without payments infrastructure that can meet the service expectations Australians already have.

The executives interviewed for this report describe a fund that operates as the central organising point for retirement – the hub through which products, advice, guidance, and payments converge. How exactly the fund orchestrates an ecosystem that includes insurers, the Age Pension, aged care, and specialist partners, will determine what the industry must build and what it can borrow.

The stakes extend beyond individual retirement outcomes.

Australia's compulsory superannuation system has become more than an economic mechanism – it functions as a social stabiliser, a structure that has helped prevent the extremes of retirement inequality visible in other developed economies.

That role is not guaranteed. Community confidence in compulsion and preservation is lower than the industry assumes, particularly among younger Australians, and the political consensus that has sustained the system across multiple parliaments cannot be taken for granted.

The industry's response to that fragility will determine whether the super fund becomes the retirement hub its leaders describe – or whether the gap between accumulation excellence and decumulation adequacy persists for another decade.