Super Funds Under Fire for Retirement Support Gaps
Australia’s multi-trillion dollar superannuation system, long lauded for its success in helping Aussies build substantial retirement nest eggs, is facing growing scrutiny over its post-accumulation phase support. While super funds excel at sophisticated investment strategies across public and private markets, a significant gap has emerged in their ability to guide members through the complexities of retirement itself.
Leading superannuation research firm Chant West has highlighted that most funds fall short when it comes to assisting retirees with fundamental questions, such as eligibility for the age pension or determining sustainable annual withdrawal amounts.
“They’re really not doing a very good job at educating people, helping them to think through about ‘what could work for me’, guiding them into what they could be doing, or providing that advice,” Chant West general manager Ian Fryer told AAP. He elaborated that the traditional mindset of funds has been focused on “protecting your nest egg.” However, the inherent purpose of a nest egg is its eventual utilisation.
The cost of professional financial advice can be a significant barrier for many Australians. Mr Fryer pointed out that a comprehensive retirement plan from a financial advisor could easily set individuals back $5000. This prohibitive cost leaves many without the tailored guidance they need to navigate their retirement years effectively.
In response to this pressing issue, Mr Fryer is urging superannuation funds to step up and offer simpler, more affordable retirement planning solutions. He envisions a tiered approach, where basic advice is readily accessible through free online tools, and members can opt for one-off consultations with an advisor for a nominal fee in the range of a few hundred dollars.
The impetus for this critical examination reportedly came from popular retirement author and columnist Bec Wilson, who approached Chant West with concerns about retirement support in 2025. This collaboration led to the development of a robust framework, comprising 18 distinct criteria, designed to evaluate how effectively super funds assist their members at the crucial point of retirement.
Industry Funds Lead the Pack in Retirement Readiness
When measured against Chant West’s stringent benchmarks, only a select group of six funds demonstrated a commendable level of support for their retiring members. These high-achievers include:
- Australian Retirement Trust
- Aware Super
- Brighter Super
- Hostplus
- Telstra Super
- UniSuper
Notably, all of these top-performing funds are industry super funds. No retail funds managed to meet Chant West’s criteria for excellence in retirement support. This disparity suggests a potential difference in strategic focus or operational priorities between the two types of superannuation providers when it comes to member retirement journeys.
Despite the general shortcomings, Mr Fryer acknowledged the innovative efforts of AMP and MLC in introducing new products designed to provide a more secure retirement income. These offerings include market-linked investment streams, where retiree accounts are pooled and collectively invested to generate a lifelong income stream. This pooled approach aims to mitigate individual investment risks and provide greater certainty for retirees.
Mr Fryer anticipates that, with encouragement from regulators, more superannuation providers will follow suit and introduce similar innovative products. The push towards ensuring Australians can not only accumulate wealth for retirement but also confidently and effectively spend it is gaining momentum, signalling a significant shift in the superannuation landscape. The focus is moving beyond the accumulation phase to embrace the critical drawdown and lifestyle management aspects of retirement.
