While The Conexus Institute* doesn’t have a global mandate, it is always happy to share its research and learn from other systems. An opportunistic trip to Paris, where The Conexus Institute was invited to present its research, Systemic impacts of ‘big super’, at the 10th IPRA (International Pension Research Association) conference at the OECD, provided the opportunity to spend a couple of weeks in London catching up with many parts of the UK retirement system. My thanks to those who made the time. I’ve penned some short reflections below. 

Assessment: Value for Money Framework and Your Future, Your Super 

One area of interest was the UK’s Value for Money framework for pensions, particularly in light of the announced review of Australia’s Your Future, Your Super (YFYS) performance test. Compared to Australia’s bright line single metric test, it is admirable that UK policymakers are considering a broader set of criteria including service levels, which have become a high-profile problem area in Australia. Developing metrics which are both relevant across different industry segments and have ‘bite’ seems to be an extremely difficult (maybe impossible) challenge.  

I can’t help but reflect on the role for a ‘sunset clause’ for a policy like performance testing. Indeed I regret not doing more work on this at the time that the YFYS test was being developed… we all got too bogged down in the detail of the test itself! There is definitely potential for the pre-conditions that motivated the policy to eventually drop away. Indeed, that is arguably already the case in Australia. Without a sunset clause, ‘wedge politics’ makes it difficult to remove or make significant changes as industry settings evolve. While Australia’s policymakers unfortunately did not include a sunset clause for the YFYS test, perhaps it is something UK policymakers should consider. Australia is now entering its fourth review of the YFYS test in five years, so it has clearly been a contested policy. 

Retirement Advice by Pension / Super Funds 

The UK is progressing on a targeted support framework which has similarities to the targeted superannuation prompts in Australia’s proposed Delivering Better Financial Outcomes (DBFO) reforms. Both countries are allowing pension/super funds to provide general advice, but in different ways.  

In the UK, pension funds can provide general advice while naming the products. In Australia, it is proposed that super funds provide general advice nudges which prompts activity but only refer to a class of products (e.g. an account-based pension). 

I feel like the UK has more appropriate policy settings by allowing general advice to include product names. Australia has a major challenge with implementation slippage (people receive guidance or advice and then fail to implement). It is a complex system, with anecdotes that some people don’t know the difference between an account-based pension and the government’s Age Pension. The Australian system also has problems with terminology and product labelling. Given Australian policy settings support a degree of vertical integration to enable APRA-regulated super funds to assist retiring members, I wonder if using product names in those recommendations would heighten implementation rates with little incremental risk to consumer outcomes. 

Interestingly, Australian policymakers are looking to enable super funds to go beyond providing general advice. Under the ‘advice through super’ component of DBFO, super funds would be able to provide personal retirement advice on a collectively charged basis. The advice can consider broad personal circumstances (with limits in scope) but recommendations can only be directed at members’ interests in the super fund. Australian super funds have already made progress towards providing simple, scalable personal advice, with technology providing the foundation.  

It will be an interesting case study for the UK to monitor. The potential is for more personalised advice which is richer in quality than general advice and provides retirees with more confidence, resulting in higher implementation rates and improved retirement outcomes. The degree to which limited scoping constrains the quality of the advice, the development of ‘off-ramps’ where a member with complex circumstances is referred to a comprehensive advice service, and the development of scalable, cost-effective super fund retirement advice offerings will be fascinating to watch.   

Perhaps even success in Australia may not mean the policy reform would work in the UK. The challenges of providing simple but quality personal retirement advice may be more difficult in a system with multiple pots (often with defined benefit arrangements). The cost/benefit trade-off may be less attractive in the UK given smaller retirement balances.   

Retirement defaults 

It was interesting that the UK’s Pension Schemes Bill requires trustees to provide a retirement default option to every member when they start to ask about taking benefits. The industry has responded quickly in developing default offerings and it was interesting to observe what can be achieved in a relatively short period of time.  

Last month at our Retirement Leaders Summit Australian super funds suggested that retirement defaults may be required to ensure baseline outcomes across a large cohort of members retiring each year. The proposal came out of the blue but seemed to have broad support across funds. However our suspicion is that many funds have different interpretations of the word ‘default’ and envisage different use cases. We have committed to contributing strongly to a good quality discussion around retirement defaults.  

A broad reflection is that defaults raise the floor, but ‘advice through super’ significantly raises the ceiling in terms of what can be achieved for retiring Australians.  

Mansion House Accord and implications 

Under the Mansion House Accord, signatories pledge to invest 10 percent of their workplace portfolios in assets such as infrastructure, property and private equity by 2030. As an Australian observer it is an interesting development given the context that for many years, many super funds have had an allocation to private assets in the order of 20 – 30 percent. I share four reflections on the Australian experience which may be useful.  

The first reflection is on performance. The Conexus Institute does not carry a permanent expectation that private assets will always outperform public markets. Many Australian funds experienced excellent early program investment outcomes, but returns for many funds have underperformed public markets more recently. The Mansion House Accord will introduce a swing factor, public versus private markets, into comparative performance. 

The second is on implementation. There is a broad range of implementation models, partly informed by size, but largely informed by implementation beliefs around what is the most effective model. A simple comparison is that Australia’s two largest funds, AustralianSuper and Australian Retirement Trust (ART), have significant differences in how they implement their private market programs (AustralianSuper is building large teams in major city locations to create direct sourcing capabilities while ART runs more of a partnership model with private asset managers). There can be many roads to success (and underperformance) in private markets. 

The third reflection is on liquidity management. While 10 per cent is a relatively modest allocation, it does add to the range of factors which can aggregate to create a fund-level liquidity event. We view that ensuring fund-level liquidity management frameworks and processes are high quality is an entry ticket to using private assets effectively. Many Australian funds are well-developed in these areas, but we think some funds have room to improve. 

Finally, I wanted to reflect on unit pricing practices. Private assets are valued less frequently and typically on a lagged basis. This means that unit prices have an embedded degree of staleness in them which introduces member inequities which may affect those contributing or withdrawing. Having quality frameworks to manage these inequities is important. Under APRA, Australian regulatory settings are mostly principles-based in the area of valuations and we see a large variation in processes and outcomes. On a related note, Australia’s financial services regulator ASIC recently reviewed practices around financial statements and audited valuations of private assets and found practices were lacking.  

Overall, the two systems have much to learn from each other. Australia can monitor the UK retirement default experience and observe implementation rates when product names are included in general advice recommendations. The UK can see how Australia’s scaled personal retirement advice reforms develop and consider how the Australian system has adapted to some of the myriad challenges associated with private asset investing.  

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

This article was edited on 6 November 2025 to clarify that the UK’s proposed targeted support framework has similarities to the targeted superannuation prompts in the proposed DBFO legislation.