One of the major tasks in meeting the retirement challenge is creating more service-led organisations which assist members into an appropriate retirement solution. Default settings do much of the heavy lifting in the accumulation phase. As the situation faced by many retirees is idiosyncratic, most would benefit from a more tailored approach from both financial and confidence perspectives.

Greater personalisation comes at a cost to super funds. Funds need to address three additional degrees of dimensionality in retirement compared to the accumulation phase: 

1. Additional products such as lifetime income streams.
2. Engaging with members to understand their situation and preferences.
3. Delivering personalised integrated retirement solutions that might bring together different products combined with a drawdown strategy.

Dimensionality represents complexity and cost. How the cost will be met and ultimately borne by members (in full or part) is fascinating. We are particularly interested in the challenges posed by low-balance members. 

During the accumulation phase, needs are broadly homogeneous and can be met by product-based solutions such as MySuper. When it comes to retirement the idiosyncrasies around retirees’ circumstances, needs and preferences become more substantial and relevant. 

Meanwhile, low account balances will limit access to some retirement pathways due to cost, such as comprehensive financial advice. The challenge for super funds is to cost-effectively provide a range of retirement services that appropriately serve all their members when members have widely differing needs and capacity to pay.

‘Low balance‘ not a proxy for homogeneous needs

A significant portion of members entering retirement will always have low balances. This is not just due to some having low incomes. Contributions can be limited by many factors including reduced participation in formal work, career breaks, part-time work, unemployment and immigration. This was acknowledged in the Retirement Income Review: “… given superannuation is an employment-based scheme, superannuation balances people take into retirement broadly reflect working-life inequities.”

The needs of low-balance retirees may also be influenced by aspects such as their financial assets outside of super, housing situation, debt levels, partnership status, access to inheritances, health and financial literacy. 

It would be convenient and cost-effective for funds if low-balance retirees could all be treated homogeneously. Unfortunately, a one-size-fits-all approach to low-balance members won’t serve all these retirees well. Many low-balance members would benefit from tailored solutions, both from the perspective of the quality of the solution and the confidence and reassurance that comes from their personal situation being acknowledged. 

Indeed, CoreData research has found that financial advice has an outsized impact on the retirement outcomes of low-balance members. CoreData’s Value of Advice (2026) found that even when controlling for correlated factors, those with under $200,000 in superannuation experienced a dramatically higher psychological and financial uplift than those with higher balances. 

From the abstract to the tangible: the different challenges faced by super funds

The chart below explores the challenges faced by super funds in meeting the retirement needs of their respective memberships. The horizontal axis, showing the percentage of a fund’s membership aged 55 or older, is a proxy for both the need for those funds to focus on retirement and the business case for spending to develop retirement offerings. The vertical axis, showing average member benefits of those aged 55 or older, proxies the capacity of members to pay for a more personalised service. We use industry medians (orange lines) to divide the chart into four quadrants. 

Exploring the challenges faced by funds within each quadrant:

Q1:  These funds have a sizable portion of members who can afford financial advice, but a modest portion of their overall membership in or approaching retirement. These funds might support their members by providing an advice service that extends to a comprehensive offering, in part as a defence against members using external advisers who move them to an advice platform. However, the lower portion of members in or approaching retirement creates cross-subsidisation issues for developing quality retirement offerings for all members. 

Q2: These funds are dominated by advice platforms, where a strong focus exists on providing functionality to assist advisers in providing a quality retirement strategy. Some of the non-platform funds in this segment, such as Aware Super and UniSuper, also have sizable comprehensive advice services. The higher portion of members in or approaching retirement underpins a stronger business case for developing quality retirement offerings for all members. 

Q3: These funds have a large portion of their membership in or approaching retirement with many low-balance members. They face the challenge of providing personalised retirement services at scale to members with limited capacity to pay. Brighter Super is one fund recognised for its range of low-cost advice services. Digital and hybrid advice offerings will likely become prominent. Funds in Q3 may also explore whether pre-set retirement solutions including persona-based offerings can meet the needs of their retirees.

Q4: These funds need to cater for a lower proportion of members in or approaching retirement with many having lower balances. Similar to Q3, they may seek to deliver scalable advice services and pre-set solutions that can account for the personalised needs of their members. However, the business case and cross-subsidisation issues for developing such offerings will be somewhat challenging, suggesting a heightened desire to do so at low cost. 

The challenge of tailoring at low cost

While all funds need to develop a spectrum of retirement services and products, funds in Q3 and Q4 will need to focus on lower-cost scalable solutions. Historically, the mindset has been that services are high-cost relative to product. However, technology can be the great leveller. 

Technology may be used to develop retirement advice processes to help many retirees. Where scale was provided by product during accumulation, technology can perform a similar role as a service. Nonetheless, even a scalable advice process can only go so far with regards to personalisation, particularly under existing and proposed regulatory settings. Off-ramps will be required to direct a member towards a more comprehensive advice pathway. 

Research suggests that retirees still prefer a component of in-person service. This allows questions to be answered and provides assurance and confidence. The scaled retirement advice processes of some funds incorporate an in-person component, with Aware Super arguably the most prominent example.

Pre-set retirement solutions have an important role to play. Multiple solutions, such as the persona-based approach used by CSC, provide benefits for different member types. However, self-choice will only go so far. Assisting members by matching them with a suitable solution enters the world of advice. Recent fund-based research on defaults by The Conexus Institute reveals that many funds would like to use pre-set solutions to initially engage members, from which they will hopefully guide them to a more personalised solution. 

Retirement is a challenge for all super funds, but every fund faces its own nuanced challenge. Low-balance members need more than just a single standardised retirement solution. Technology and a menu of pre-set solutions will be essential for supplying personalisation at scale and low cost.

Dr David Bell is executive director of The Conexus Institute.
Dr Geoff Warren is research fellow at The Conexus Institute.
Harry Inwood is a data scientist with CoreData Research.

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