The $105 billion profit-to-member super fund Cbus has eliminated its minimum application requirement for members to open an account-based pension, and along with it the minimum balance required to maintain an ABP.

The construction and building industry super fund has also renewed its calls for changes to legislation to allow retired members to contribute to their pension accounts, and to remove minimum drawdowns for low-balance members.

Before the new zero application requirements that came into effect on 1 September, Cbus members needed a minimum of $10,000 to open an ABP and were required to maintain a balance of $2000 to avoid it being closed.

Cbus’ application minimums were already among the lowest in the industry. Research in late 2024 by The Conexus Institute* showed that some funds, including AustralianSuper and HESTA, had $50,000 minimums; and Australian Retirement Trust had a $30,000 minimum.

The institute suggested that these minimum application amounts might help explain  why an estimated one million Australians aged over 65 still have an accumulation account.

In addition, “minimum application amounts may be precluding some low-balance retirees from accessing account-based pensions”, it said.

“We estimate that 50,000 Australians who are retiring over the next year may not be able to access an ABP because they do not meet minimum application requirements of their superannuation fund.”

Cbus chief executive Kristian Fok tells Investment Magazine that removing the minimums ensures that “all members, regardless of their super balance, can access the retirement products they need and want”.

“This change reflects our commitment to giving members greater flexibility in retirement and removing unnecessary fund rules that may disadvantage those with lower balances,” Fok says.

“For many Cbus members retirement isn’t a single event, they move in and out of work before they reach the final tools down. They need a system that supports that reality. We believe the government should go further and allow members to contribute to their pension accounts, which would simplify the system and reduce fees for retirees.”

Fok says to further improve flexibility, the government should consider exempting members with low account balances in retirement from minimum drawdowns.

“These reforms are about making super work better for all Australians, especially those doing physically demanding jobs who retire earlier than most,” Fok says.

The Conexus Institute executive director David Bell says the institute believes “everyone should have the right to access a tax-free retirement account”.

“Treasury’s draft Best Practice Principles effectively says the same thing,” Bell says.

“Some of the funds with a high minimum balance requirement have a large proportion of low-balance members. They are potentially letting down a large portion of their retirement membership.”

According to Bell, some of the funds with a high minimum balance requirement have strategies in place which are ABP-centric but “they preclude access to an ABP for a sizable proportion of their retirement membership”.

“Some funds have expressed concern about member cross-subsidisation challenges of offering ABP’s to low-balance members,” Bell says.

“We think these funds need to reassess their purpose, their values, and their governance frameworks when it comes to this issue.”

Super Consumers Australia welcomed Cbus’ decision to scrap minimum account balances for people wanting to establish a retirement account.

“All retirees should have access to retirement tax concessions, not just the wealthy,” SCA chief executive officer Xavier O’Halloran says.

“An estimated one in four new retirees are missing out on tax concessions because of barriers put in place by super funds. It’s inequitable and funds have been too slow to act.

“It’s appalling that almost a year on from this issue gaining public attention that so few have taken action. Two of Australia’s biggest funds, AustralianSuper and HESTA, with some of the highest numbers of low balance members, are still excluding people from the benefits of the retirement phase unless they have more than $50,000 in super.”

SCA wants to see “all super funds with this inequitable barrier in place to publicly commit to a short timeframe for their removal”.

* The Conexus Institute is a not-for-profit think-tank philanthropically funded by Conexus Financial, publisher of Investment Magazine.