This article was originally published in the print edition of Retirement Magazine Vol. 2

The retirement phase of superannuation is growing in size, complexity and significance, driven by Australia’s ageing population and the maturing of the system.

Approximately 2.5 million fund members are expected to retire over the next 10 years, while the retirement phase asset pool is on track to grow from $550 billion to $3 trillion over the next two decades, according to APRA estimates.

This has important implications for the superannuation industry, which will need to support a substantial increase in members and assets in retirement. This is a significant challenge for an industry that has been largely focused on the accumulation phase since the Superannuation Guarantee was introduced in 1992.

In essence it’s a change to the business model. For a matter of such significance it’s evident that improving retirement outcomes for superannuation members will continue to be a priority for APRA. We will be keenly focused on ensuring trustees are well-equipped and positioned to support superannuation members as they approach retirement and during their retired years.

Retirement Income Covenant

The Retirement Income Covenant has been key to driving a shift in the industry’s attention to the retirement phase.

Since the covenant came into effect three years ago, APRA and ASIC have joined in monitoring trustees’ implementation of their obligations to develop and execute strategies to support members who are nearing or in retirement.

We have been resolute in calling on trustees to address gaps and weaknesses in their implementation of the covenant, in areas including the quality and depth of research and data, understanding member needs and tracking and measuring the success of retirement income strategies.

As well as direct engagement with entities, APRA has worked with ASIC to conduct a thematic review and two pulse check surveys to gauge progress.

Early soundings from the latest pulse check earlier this year indicate trustees are confident they are continuing to make progress. We expect to publish the report findings later this year. But regardless of how little or substantial progress has been made, most trustees would accept that there is more work to be done.

New requirements that have come into effect this year further increase trustee accountability for the effectiveness of their retirement income strategies.

The Financial Accountability Regime (FAR), which was extended from banking to the superannuation and insurance industries in March, requires trustees to appoint an accountable person to take responsibility for member outcomes, including the delivery and execution of retirement income strategies.

Under APRA’s updated prudential standard for Strategic Planning and Member Outcomes (SPS 515), which became effective in July, trustees need to conduct a review of the appropriateness, effectiveness and adequacy of their retirement income strategies at least every three years.

Trustees are also required to assess and demonstrate – every year – the outcomes achieved for members as a result of their retirement strategy, and to embed this practice in business performance review processes.

Supporting the diverse needs of all members

Understanding the needs of members in retirement is critical to developing strategies, solutions and products that will be beneficial to members.

Members in the accumulation phase share a simple, common need: to build assets to fund their retirement. How large their assets grow will depend on a range of factors, such as the size of contributions, where funds are invested, costs incurred and fund performance.

By contrast, the needs of members in the retirement phase of superannuation are far more diverse and influenced by their own personal circumstances. Understanding and supporting these needs will be complex.

Having insufficient data on individual members further adds to the complexity of the task.

Under the covenant, trustees are required to support all fund members approaching or in retirement, regardless of the size of a member’s super balance, their level of engagement with super, and whether they have access to financial advice.

All members, from high-net-worth individuals with independent financial advisers to low-balance members who are disengaged with their super, need to be supported by retirement income strategies.

Members should have easy access to information and guidance to better understand their options at the point of retirement, especially given the impact that their decisions will have on their income as retirees.

An area where trustees can have significant impact is through finding ways to support disengaged members. During the accumulation years, the default MySuper product protects the financial interests of members who are disengaged or lack confidence to make financial decisions. However, as these members head towards retirement, they will need to make critical decisions about what to do with their superannuation, including transitioning out of the accumulation phase.

Making it easier for members to access information and to understand their options better – including the benefits of moving their super assets to the pension phase – should be fundamental to any trustee’s retirement income strategy. And the engagement of members with relevant tools and guidance is something trustees can and should be measuring.

Increased transparency, better outcomes

Increased transparency of the retirement phase of superannuation will drive better outcomes for members.

In June this year APRA published data on superannuation retirement products for the first time. The inaugural publication captured key performance data for 600 multi-sector investment options where the trustee set the investment strategy or managed the investments. The key data included a breakdown of product fee structures, investment strategies and associated strategic asset allocations.

APRA will provide further insights on retirement product data over time, including in the 2026 Comprehensive Product Performance Package (CPPP), taking into account the different features and context of retirement products.

APRA is also working with Treasury to design a new reporting framework on retirement outcomes, to commence in 2027, with the data collection to be published annually by APRA from 2028.

This initiative will enable monitoring of the outcomes delivered to members in retirement in a consistent and transparent way. Hopefully it will mean that what gets measured gets done.

The reporting framework’s proposed indicators and metrics were released for consultation by Treasury in August together with a second consultation paper on best practice principles for superannuation retirement income solutions.

As outlined by Treasury, the reporting framework is looking to cover funds’ product offerings, member outcomes and cohorting practices, capturing information in areas such as drawdown options, the take up of retirement products and the provision or referral of advice.

Achieving better outcomes for Australians in retirement requires the commitment and collaboration of government, regulators and the superannuation industry.

It’s the fulfillment of the purpose for which the Superannuation Guarantee was created. The proof of this important mission will be tested by the effectiveness of the practical delivery of that purpose.

Margaret Cole is deputy chair of the Australian Prudential Regulation Authority (APRA)