The sole purpose test enshrined in law has played a vital role in keeping super focused on delivering financial benefits. But its rigidity now risks becoming a barrier to helping retirees make the most of those benefits.

If retirees are fearful of spending their savings, or if they enter retirement without adequate preparation for the social, psychological and health challenges it brings, then the purpose of super is not truly being fulfilled. What use is wealth if it is not translated into wellbeing?

Superannuation funds are uniquely positioned in how they support Australians from their first job right through to retirement. This means funds are there for their members at every stage of their lives.

Reframing the sole purpose test to allow funds to support members more broadly – providing trusted guidance on health, aged care, or engagement with community – would give funds the opportunity to act as genuine retirement partners, helping Australians to live better and more fulfilling lives.

Retirement is a deeply human transition and not simply a financial milestone. If super funds are to truly support their members, then the law must give them the scope to walk alongside members not just as financiers, but as guides, supporters, and enablers of a meaningful life after work.

We are rapidly approaching an inflection point where the lack of support for retirees can no longer be ignored. Just like the prescience of those that imagined the system in 1992, today’s political leaders must address this before it becomes a bigger problem.

Balances and beyond

Superannuation has unquestionably excelled at helping Australians save for retirement. But with millions more people retiring en masse over the coming decades, both industry and government need to start thinking beyond members’ balances and focus on how we can support them to live well in retirement.

Few sectors in Australia attract as much scrutiny as superannuation. And given the industry manages more than $4 trillion in Australian’s retirement savings, the attention is justified. Fees, fund performance, governance, and regulation are rightly debated in Parliament, through the media, and even around kitchen tables.

This scrutiny has been well earned. For the past three decades, super has been one of Australia’s great nation-building policies. It has helped millions of Australians accumulate wealth, providing financial security that was unthinkable a generation ago.

And while the system appears a resounding success on the metric of wealth accumulation, research show it’s not always that straightforward.

The Grattan Institute has shown that retirees tend to spend far less of their superannuation than they could, often out of fear that the money won’t last the rest of their lives.

National Seniors research similarly found that many older Australians are reluctant to draw down their super, treating super as a buffer for unforeseen costs rather than as income to support an active and fulfilling life.

These challenges are going to become a lot more apparent as Australia’s demography changes over the coming decades.

By 2050, one in five Australians will be over the age of 65. Treasury’s Intergenerational Report projects that the number of people aged 65 and over will more than double and the number aged 85 and over will more than triple by 2063.

And unlike previous generations, many will spend 20 or even 30 years in retirement. This longevity is a triumph, but it also stretches the limits of financial planning, health systems, and social support.

As this change takes effect, the inadequacies of a retirement system focused only on investment returns will become stark. The cognitive, emotional and practical challenges of retirement that go undiscussed today will become a central topic of conversation.

Retirement brings freedom, yes, but also a daunting array of anxieties and a list of seemingly unanswerable questions: How long will my money last? What healthcare challenges lie ahead? Will I stay at home? How do I structure my week?

CSC hosted an event for members approaching retirement earlier this year and what stood out most was the sheer uncertainty. Many of the 235 attendees had very little knowledge of the practicalities of retirement, how to prepare and, worryingly, where to get support.

The experience of CSC’s members is a microcosm of the broader challenges facing Australia’s retirement system.  Our members’ questions and concerns—about health, purpose, community, and longevity—mirror those emerging across the nation. This reinforces the need for super funds to be empowered to support members holistically, not just financially.

Ultimately, the measure of our superannuation system’s success will not be found solely in account balances, but in the quality of life enjoyed by those it serves. By broadening our vision and updating our frameworks, we can ensure that super delivers on its true promise: empowering Australians to live well, with confidence and purpose, throughout their retirement years.