Ummul Ruthbah

A new analysis by the Monash Centre for Financial Studies (MCFS) highlights the fragility of retirement outcomes for Australians.

Australia’s superannuation system is designed as the backbone of retirement security, yet the drawdown phase is fraught with uncertainty. Longer life expectancy, rising living costs and market instability mean that many retirees face difficult choices about how to sustain income.

The study, authored by Associate Professor Ummul Ruthbah and Dr Trinh Le from the Monash Business School, used Capital Market Assumptions developed by the Centre, to show that the sustainability of retirement income rests on three factors: the size of the starting balance; the mix of equities and bonds; and the sequence of market returns in the first years of retirement.

The MCFS Capital Market Assumptions incorporate inflation expectations, monetary policy settings and currency dynamics to provide a forward-looking view of returns and risks.

“The findings of the study are sobering,” Associate Professor Ruthbah said.

“Retirees with less than $250,000 face a high likelihood of exhausting their superannuation within a decade if they target a comfortable lifestyle. At balances above about $400,000, the chance of sustaining income rises to near certainty, regardless of portfolio design.”

The analysis also exposes a deeper structural challenge regarding gender gaps and policy implications.

The report states women approaching retirement hold balances 20-30 per cent lower than men, leaving them disproportionately exposed to depletion risk.

“For median female retirees ($212,000), even a balanced portfolio still carries material chances of exhaustion within a decade, while men with median savings ($283,000) face far more secure outcomes,” Associate Professor Ruthbah said.

“This gap has profound implications for retirement adequacy and policy design. It underlines the need for measures to boost women’s superannuation savings, whether through targeted contribution incentives, reforms to address career breaks and pay disparities, or enhancements to the Age Pension safety net.”

The analysis also challenges a common belief about investment strategy during retirement.

“Mixed equity-bond portfolios, which are investment strategies combining stocks (equities) and bonds (fixed income), provide the most consistent outcomes for modest balances,” Dr Le said.

“All-equity strategies deliver higher average ending balances but carry sharper drawdown risks, while bond-heavy portfolios virtually guarantee capital erosion when withdrawals are set at comfortable levels.”

According to the researchers, retirees with small savings can’t sustainably fund higher spending targets, regardless of strategy. Larger balances can withstand higher withdrawals, but overly conservative allocations virtually guarantee erosion.

“If someone has a low superannuation balance, one option is to adjust spending. Our study finds that when retirees target a moderate level of spending rather than a more comfortable lifestyle, the portfolio is more likely to remain sustainable over ten years, regardless of the asset allocation,” Associate Professor Ruthbah said.

“Another important consideration is maintaining some exposure to equities. Our capital market assumptions suggest that bond-only portfolios are unlikely to generate optimal returns relative to the level of risk taken over the long term.”

The research also highlights the importance of market losses early in retirement: for example, someone who retired in 2022 – a year impacted by market volatility that delivered negative equity and fixed income returns – may end up with a significantly lower portfolio balance after 10 years than someone who retired in 2023 with the same superannuation balance and investment strategy.

One approach retirees can consider is to reduce or postpone withdrawals from their superannuation during periods of significant market decline. More generally, retirees may benefit from adopting a flexible withdrawal strategy that adjusts to market conditions and personal circumstances, rather than relying on a fixed withdrawal rate regardless of investment performance.

For policymakers, the findings underscore the need to enhance safeguards for low balance retirees, particularly women, while ensuring that retirement portfolios strike a balance between growth potential and downside protection.

Read the report: Comfort or Collapse: Why Balance Size and Design, Not Just Returns, Decide Retirement.

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Ultimately, a modern TTR strategy is a highly effective tool for pre-retirement financial planning

We are currently witnessing one of the most significant demographic transformations in Australia’s history. Over the next decade, an estimated 2.5 million Australians are expected to enter retirement^[1]. This article, proudly sponsored by Allianz Retire+, examines the use of Transition to Retirement strategies as an important part of pre-retirement planning.

As this final wave of the Baby Boomer generation – as well as early Gen X –   transitions out of full-time work, they are collectively moving hundreds of billions in superannuation assets from the accumulation phase into retirement income accounts. This massive demographic shift emphasises the need for specialised financial advice.

As individuals approach this milestone, planning for a seamless transition into the next phase of life is essential. While retirement marks the culmination of a long and successful career, the runway leading up to it can often induce stress and uncertainty. Comprehensive pre-retirement planning is critical to ensure clients transition comfortably and securely. Thorough structural modelling helps clients prepare not just financially, but mentally and emotionally for the profound lifestyle shifts ahead.

For financial advisers, the ageing Boomer and early Gen X cohorts represents a massive growth opportunity. This demographic requires highly specialised guidance. They face unique hurdles, including navigating the strict regulations surrounding the Transfer Balance Cap (TBC), managing the implementation of the incoming Division 296 tax on high-balance accounts and mitigating complex sequencing and longevity risks to ensure their money lasts for 25 to 30-plus years.

Catering to these shifting needs means advisers must look beyond basic wealth accumulation. Delivering true value today requires implementing sophisticated retirement income streams – such as optimised Transition to Retirement (TTR) strategies – while concurrently addressing estate planning and intergenerational wealth transfer.

By initiating pre-retirement strategies early, financial advisers can minimise risk in the transition phase, iron out structural complexities and build the long-term confidence their clients need to enjoy a self-sufficient retirement.

The 2026 advice landscape

Today’s advice landscape demands a shift in how advisers approach the runway to retirement. Clients are no longer merely crossing a finish line into fulltime leisure; they are staging their exits.

The combination of increased longevity, flexible hybrid work models and shifting personal priorities means the traditional hard stop at age 60, 65 or 67 has been largely replaced by a multi-year downshift. Clients are typically working longer, but some are working differently; taking on consulting roles, shifting to part-time work or stepping back from corporate leadership into passion projects.

With the concessional contributions cap now indexed to $30,000 (changing to $32,500 from 1 July 2026) and the preservation age uniform at age 60 for anyone born after 1 July 1964, the modern TTR strategy has evolved. A well-structured TTR is a tool for tax effectively maximising super contributions, structural cash-flow smoothing and lifestyle design. It allows advisers to help their clients to bridge the income gap for those clients easing into retirement, better manage wealth accumulation in a volatile economic environment and clear liabilities before full retirement.

TTR strategy – the rules of engagement

A TTR strategy restructures a client’s cash flow by supplementing their standard salary with a regular income stream from a transition to retirement pension (TRIS). By drawing income from both their employer and their super fund, you can utilise specific tax concessions to accelerate their retirement savings during their final working years.

The rules

To initiate a TRIS, a client must have reached age 60 – but not 65 or older – and still be in the workforce. This satisfies a partial condition of release. Some super money has to be put into the ‘pension’ bucket to cover the TRIS, but clients also need to keep funds in their super account to continue to receive employer’s compulsory contributions, be able to make voluntary contributions and cover any insurance costs.

A TRIS operates within tight, non-negotiable parameters calculated on the account balance at commencement, and subsequently on 1 July each financial year:

• The 4% floor – the trustee must ensure the client draws down a minimum of 4% of the account balance annually (pro-rata applies if commencing mid-year).
• The 10% ceiling – drawdowns are capped at a hard maximum of 10% per financial year. This cap is not pro-rated for mid-year commencements; a client starting a TRIS on 1 May can still draw up to the full 10% before 30 June, provided cash flow permits.

This approach is flexible. If a client commences a TRIS but no longer needs the income, the pension can be stopped at any time, and the client can return their focus to accumulation.

Tax treatment

There is different tax treatment of assets within the fund from those received in the client’s hands:

• Inside the fund accumulation phase rules apply – the investment earnings generated by assets backing a TRIS do not enjoy tax-exempt status; instead, they continue to be taxed at up to 15%
• In the client’s hands – all pension payments received by the client from the TRIS are 100% tax-free. They do not form part of the client’s assessable income, eliminating any personal income tax liability on the drawn funds.

TTR strategies

Implementing a TTR strategy allows financial advisers to reengineer a client’s cash flow during their final working years. By blending employment earnings with a tax-effective income from superannuation, advisers can utilise tax efficiencies to help clients build retirement savings and/or manage the transition to retirement life while maintaining their current income and lifestyle.

Contribution recycling to boost super

One of the primary uses of a TTR strategy lies in effectively coordinating contribution recycling to maximise contributions to super and take advantage of tax-free income from a TRIS. Contribution recycling can be described as a financial loop. It enables your client to lower their taxable income while simultaneously boosting their retirement savings.

As long as your client is aged 60, money coming from the super pension is entirely tax-free. At the same time, money going into super as a concessional contribution attracts a tax deduction. This enables you and your client to leverage the latest indexed thresholds:

• Concessional contributions cap: The general concessional cap will be $32,500 from 1 July 2026. This gives clients expanded scope to salary-sacrifice or make personal tax-deductible contributions, potentially reducing the amount of tax paid.
• Catch-up or carry-forward contributions: for clients with a Total Superannuation Balance (TSB) below $500,000 as of the prior 30 June, they can tap into unused concessional caps from the previous five financial years make further contributions to their super.

By drawing tax-free income from their super via a TRIS and contributing more to their super, clients can benefit by maximising tax deductions during their peak earning years without compromising their day-to-day net income.

Case study: Optimising net wealth via contribution recycling

David is 62 and earns a salary of $160,000 plus 12% superannuation guarantee (SG) contributions. He plans to work full-time for another three years. His current superannuation accumulation balance is $450,000, and his day-to-day living expenses require a net, take-home income of approximately $114,000 per year.

David’s goals are simple: he wants to maximise his super balance before fully retiring, but he can’t afford to reduce his net income. His financial adviser implements a contribution recycling strategy utilising a Transition to Retirement Income Stream (TRIS).

With the SG rate at 12%, David’s employer contributes $19,200. The adviser establishes a salary sacrifice agreement for the remaining $10,800 to make the most of the (current) $30,000 concessional cap. This additional salary sacrifice reduces David’s take-home pay.  To close this gap, the adviser rolls $200,000 of David’s accumulation balance into a TRIS and sets an annual tax-free pension drawdown to close the gap, which is well within the 4%-10% range.

Because David is over age 60, the pension payments he receives are tax-free. His net household cash flow remains identical to his pre-strategy position, meaning his lifestyle is completely unaffected.

However, behind the scenes, the financial architecture has shifted; the $10,800 redirected into superannuation is taxed at the fund level at 15%. Had that same $10,800 been taken as standard salary, it would have been taxed at David’s marginal tax rate.

A debt reduction strategy

Mortgage debt in retirement is on the rise. Some estimates have up to 35 percent of Australian retirees having to service a mortgage, something that is increasingly difficult from a fixed retirement income. Some clients look to boost their cash flow in the years leading up to retirement to clear debt before they finish work; mortgage, personal loans or lines of credit, credit cards. By maintaining current employment income and drawing a regular pension from their superannuation, clients can immediately supplement their disposable cash flow to repay debt at a faster rate.

Case study: Accelerated debt reduction via a TRIS

Sarah and Mark, both born in 1966, are actively planning for their eventual retirement, with a particular focus on world travel. However, like many pre-retirees navigating a sustained high-interest-rate environment, they are facing a significant hurdle: they are on track to carry a residual principal mortgage of $185,000 into retirement. The burden of these ongoing repayments is a major source of anxiety, as it threatens to heavily deplete their projected retirement cash flow.

After consulting with their financial adviser, the couple decided against waiting until retirement to clear the debt via a large, lump-sum superannuation withdrawal, a move that would permanently damage their retirement phase compounding power and longer-term retirement income.

Instead, having reached their preservation age of 60, both Sarah and Mark initiated a TRIS. By maintaining their full-time employment arrangements and drawing a regular, tax-free pension from their respective super funds, the couple successfully boosted their household’s pre-retirement disposable income.

Every dollar from the tax-free pension was funnelled directly into their mortgage, accelerating their principal repayments. While they may still need a minor capital injection to completely payout the loan when they retire, this approach significantly reduces their debt liability. The strategy allows them to preserve a greater amount of underlying capital within the superannuation environment to ensure a stronger foundation for their long-term retirement income.

Easing into retirement

A TTR strategy can enable clients to transition into retirement gradually by working fewer hours without taking an income cut. By blending a part-time salary with regular pension payments from their super fund, clients can maintain their lifestyle, manage ongoing financial commitments and execute pre-retirement plans.

Case study: Transitioning to retirement

Elena, born in April 1966, wants to scale back from full-time corporate work. Having recently reached the uniform preservation age of 60, she is in excellent health and wants to prioritise long-distance travel while she is highly active. However, she does not want to completely exit the workforce or compromise her current lifestyle.

Following a comprehensive cash-flow analysis by her financial adviser, Elena negotiated a flexible part-time arrangement with her employer. Rather than dropping to a three-day workweek, she chose a structured leave-purchasing model: she continues to work a standard five-day week but receives an additional eight weeks of annual leave each year to accommodate her extended travel plans.

To offset the corresponding reduction in her base salary, her adviser facilitated a partial roll-over of her accumulated superannuation into a TRIS.

Elena now draws a monthly, tax-free pension payment from her TRIS that perfectly matches her net employment income deficit. This dual-income architecture allows Elena to fund her bucket-list travel goals. Importantly, the strategy preserves the majority of her underlying capital in the superannuation environment; this ensures her core retirement wealth continues to compound efficiently until she transitions to full retirement.

Important considerations

A TTR strategy can significantly alter the architecture of a client’s wealth, meaning several broader structural, operational and psychological factors should be considered.

Capital erosion versus lifestyle objectives

The core risk of a TRIS is that drawing income from superannuation while continuing to work can cannibalise the client’s final retirement nest egg. Cash-flow modelling can help to ensure that any income drawn down is genuinely serving a strategic purpose – such as contribution recycling or clearing high-interest debt – rather than simply funding a lavish lifestyle.

In the current volatile environment, it’s important to note that should a client commence a TRIS, drawing the mandatory 4% minimum forces the realisation of capital losses inside the fund. This can compound sequencing risk and impair the capital’s ability to recover before the client enters full retirement.

Insurance implications inside super

Moving a significant portion of a client’s balance from an accumulation account to a TRIS can leave the accumulation account underfunded. Most superannuation funds require a minimum balance to maintain life, total and permanent disablement or income protection policies active. If the accumulation account is drained too close to zero to fund the TRIS, the insurance policies may automatically cancel, exposing the client to massive uninsured risks right before retirement.

Contribution limits

Annual contributions into a client’s superannuation account are regulated by government-mandated caps and need to be factored into any TTR strategy.

Concessional (before tax) contributions cap

2025-26: The cap is $30,000 per financial year.

2026–27: The cap increases to $32,500 starting 1 July 2026

This includes employer SG contributions, salary sacrifice and personal deductible contributions. Using the carry-forward rule, clients can contribute more than the current annual cap without penalty, provided their total super balance was less than $500,000 on 30 June of the previous financial year.

Non-concessional (after-tax) contributions cap

2025–26: The standard annual cap is $120,000

2026–27: The standard annual cap increases to $130,000 starting 1 July 2026.

Centrelink impacts

The income received from a TRIS may impact the client’s eligibility for income support payments, such as a disability pension or job seeker allowance.

The psychological transition

Finally, advisers must manage the behavioural shift. Moving from a pure accumulation mindset, watching the balance grow, to a decumulation mindset may be anxiety provoking for some clients.

Ultimately, a modern TTR strategy is a highly effective tool for pre-retirement financial planning. In today’s regulatory environment, successfully implementing a TRIS requires advisers to carefully balance contribution caps and uniform preservation rules against such as sequencing risk or longevity risk. Advisers can use the TTR framework to deliver clear, quantifiable value. When executed correctly, it effectively bridges the gap between full-time work and retirement, giving clients the financial security they need to confidently transition into the next stage of life.

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Notes:
[1] https://ministers.treasury.gov.au/ministers/jim-chalmers-2022/media-releases/improving-retirement-phase-superannuation

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Robert Francis

Half of Australian workers remain unaware of the most significant change to superannuation in decades, which is set to impact at least 1.2 million Australians from 1 July 2026.

That’s according to a new report surveying 1,000 working Australians, commissioned by global trading and investing platform eToro and its Australian investing app Spaceship.

The study found that half (50 per cent) of all Aussie workers have no awareness of the new rules taking effect in just 30 days, which will require employers to pay superannuation payments with each pay packet rather than quarterly. Only 14 per cent of respondents said they know “a lot” about the changes.

Once briefed on the reforms, however, Australian workers were largely in agreement on the potential benefits. Ninety-two per cent agreed Payday Super will help working Australians build more retirement savings, while 94 per cent said the changes will make it easier to notice if something is wrong with their super payments.

“The lack of awareness around Payday Super is concerning,” said Robert Francis, Managing Director of eToro Australia and Spaceship. “Super is the most powerful wealth-building tool most Australians have, and this new law will impact millions of working Australians for the better. For many, it will be their largest asset outside the family home. But as the results of this survey show, it’s often treated like an afterthought.”

A quarter of Aussies have had problems with super payments

The survey also found that nearly one in four Australians (24 per cent) have experienced missing, late, or incorrect super payments. Receiving super with each paycheck will make it easier for employees to catch any errors as soon as they happen. However, 16 per cent are unsure of whether they’ve received late or missing payments, indicating some Australians are not checking their super regularly or may not understand how to do so.

With the recent federal budget sparing super from capital gains tax changes that will hit other investments from 2027, and momentum growing to extend compulsory contributions to workers under 18, the retirement system is becoming an even more compelling place to build long-term wealth.

“Super just became much more interesting,” Robert Francis said. “It’s tax-advantaged, it’s protected, the guarantee is at an all-time high, and Payday Super means your money starts compounding from the time you earn it rather than sitting in your employer’s account for months. It’s prime time for Aussies to become more engaged with their retirement funds.”

Many Aussies are about to be paid super more frequently

The research reveals the shift many workers face: only 17 per cent currently receive weekly super contributions, while 36 per cent are paid fortnightly, and one in four (25 per cent) are paid monthly. Eleven per cent said they receive super payments quarterly, which means at least 1.2 million Australians will receive more frequent super payments when the law changes on 1 July.*

The survey also uncovered a gap between Australians’ expectations and industry benchmarks. Nearly half of Australians (49 per cent) believe they need at least $800,000 to retire comfortably, with 28% saying they need over $1 million. Yet, The Association of Superannuation Funds of Australia puts the figure at $630,000 for a single person. This disconnect highlights why reforms that boost super balances, even incrementally, matter.

“We’re in a high-cost environment that’s significantly shifting the goal posts for a comfortable retirement,” said Robert Francis. “Australia has one of the best retirement savings systems in the world, but it still requires attention and engagement from workers to reap its full benefits.”

Almost half of Australians will not make super voluntary contributions before EOY

The study also revealed that 49% of Australians have not, and do not plan to, make additional super contributions before June 30.

Only 17% have made contributions above the mandatory minimum. Just under a quarter (23%) plan to, but have not done so ahead of the imminent deadline.

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The platform market, together with the aligned SMSF market ($1.8 trillion FUM), offers products and services that are most closely aligned to the Retirement Income Covenant (RIC). These superannuation market segments are the best positioned offers to achieve the individual objectives of members.

Equity Trustees also says in its submission that recent licence conditions introduced by APRA on trustees of platforms will lead to some narrowing of investment choice on platforms.

“Equity Trustees contends that this APRA initiative alone is sufficient to ensure the continued efficient, fair and honest functioning of the superannuation platform market and that further regulatory changes are not required – the market is already the most fit for purpose superannuation market segment.”

In its submission, Equity Trustees argued that it will not be feasible for the drafters of the legislation to precisely define between ‘platforms’ and ‘RSE Licensee of platforms’ given the offers provided by all superannuation funds are increasingly overlapping and will do so more in the future as more funds design offers demanded under the RIC (see diagram).

Equity Trustees also says in its submission to Treasury on ‘Enhancing Member Protections in the Superannuation System’ that there is no sound basis for banning the professional independent trustee model, which looks after the interests of 990,000 members and has grown from approximately $10 billion to $150 billion in ten years.

“The professional independent trustee model has been the fastest growing segment of the superannuation market in the last ten years and has been responsible for material innovation in the industry,” it says in the submission.

“The model has a solid record of delivering to members and has not suffered from the high profile systemic failures that have been prevalent in the vertically integrated in-house models – both commercial models and Not-For-Profit models.”

Equity Trustees says it strongly supports proposals by Treasury to reform Managed Investment Schemes (MISs) and their Responsible Entities (REs), as well as regulation of Lead generators.

It says that the most critical point of failure in the value chain regarding Shield Master Fund and First Guardian Master Fund was the two Responsible Entities.

“The misuse of scheme assets for purposes other than investment as disclosed to investors – as the liquidators’ reports have revealed – is clearly fraud or theft causing loss to the superannuation funds and their members.”

“We welcome the reform of MISs and their REs that was the subject of Treasury’s first consultation and ASIC’s consultation in respect of the Net Tangible Asset capital requirements for REs.

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Liz McCarthy

Less than two months after the launch of both the savings and retirement income phases, MLC Retirement Boost^TM has surpassed more than $500m on MLC Expand, one of Australia’s largest and fastest growing super and retirement platforms.

In August 2025, the savings component of MLC Retirement Boost opened to a small, targeted group of advice practices, ahead of a phased soft launch to all existing MLC Expand advisers in November 2025, before the launch of the solution’s income phase in March 2026.

MLC Retirement Boost, the newly launched innovative retirement income stream (IRIS) solution, can provide up to 60% more income in retirement when complemented by traditional retirement products like an account-based pension. It has two flexible phases:

• MLC Retirement Boost (Super) operates like a standard superannuation account, while potentially enabling clients to access means test concessions for the Government Age Pension. The earlier customers contribute to MLC Retirement Boost (Super), the greater their potential Age Pension entitlements.
• MLC Retirement Boost (Pension) is designed to deliver retirement income for life, with Chant West confirming it delivers some of the highest income rates of lifetime products, and can be used separately or alongside clients’ account-based pension.

MLC Expand CEO, Liz McCarthy, said, “This is a significant milestone for MLC Expand and shows the demand we’re seeing from financial advisers for MLC Retirement Boost.

“The way that Australians think about retirement is changing and the demand for this solution is a testament to that. People want more personalisation and flexibility in their retirement planning and MLC Retirement Boost gives them this, while increasing the potential of super for more people and potentially creating higher retirement income, from their first super contribution.”

A key part of MLC Expand’s partnership with TAL and Challenger in developing MLC Retirement Boost was the establishment of a Centre of Excellence. A gateway for advisers, the Centre of Excellence provides access to expert technical insights, case studies, information and client support tools and calculators, and dedicated support to help advisers unlock the full potential of MLC Retirement Boost and elevate the value of their retirement advice.

MLC Director, Retirement Innovation, Ashton Jones said: “The feedback from advisers has been overwhelmingly positive, and advisers have appreciated the client-centric education approach we’ve taken when rolling out this solution and the way it is seamlessly integrated within MLC Expand.

“We knew the solution, coupled with our innovative partnership with TAL and Challenger, would be of interest to advisers but the response only a few months in has been really exciting.

“Importantly, this is still just the first phase in MLC’s offering in this space and we’re excited for further retirement innovations over the next 12-18 months.”

The milestone follows Chant West confirming last month that MLC Retirement Boost on MLC Expand delivers some of the highest income rates of lifetime products, also rating it ‘Four Apples – Recommended’, which is the highest possible rating for a new product. MLC Expand also received 2026 Rainmaker AAA Quality Ratings for MLC Expand Essential and Expand Extra, and has been named a finalist in the Advised Product Of the Year and Best Fund: Lifetime Product at the Chant West 2026 Fund of the Year awards.

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Mano Mohankumar

Super funds delivered a strong April, with the median growth fund (61–80% growth assets) up 2.6%, buoyed by a sharp rebound in global share markets. The result recouped a significant portion of March’s 3.2% loss. With international markets also up in May so far, Chant West estimates that with just six weeks remaining in FY26, the median growth fund return is sitting at 6.4%. This follows three consecutive years of very strong performance – 9.2% in FY23, 9.1% in FY24 and 10.4% in FY25.

Chant West Head of Superannuation Investment Research, Mano Mohankumar, says that the April share market rally was driven by a ceasefire in the Middle East, albeit a tenuous one, and solid corporate earnings in the US. “Over the month, developed market international shares returned a lofty 9% in hedged terms, led by the technology and communications services sectors amid ongoing investor enthusiasm for AI. With the Australian dollar appreciating against most major currencies, the return in unhedged terms was more modest, but still healthy at 4.4%.

“Emerging markets shares performed even better, gaining 9.3% in unhedged terms. While not reaching the same heights, Australian shares still generated a solid gain of 2.3%. With the risk-on sentiment, returns from bonds were flat with Australian and international bonds up 0.1% and 0.3%, respectively.”

“The experience over the past two months is a timely reminder that super is a long-term game. Members who panicked in March and switched to cash or a lower risk diversified option, not only turned paper losses into real ones, but also missed out on the subsequent market rebound. Missing even short periods of strong returns can have a significant impact on retirement outcomes due to the power of compounding.”

The table below compares the median performance to the end of April 2026 for each of the traditional diversified risk categories in Chant West’s Super Fund Performance Survey, ranging from All Growth to Conservative. All risk categories have generally met their typical long-term return objectives, which generally range from CPI + 1.5% for Conservative funds to CPI + 4.25% for All Growth.

Long-term performance remains above target

MySuper products have been operating for over 12 years, so when considering performance, Mohankumar says it’s important to remember that super is a much longer-term proposition.

“Since the introduction of compulsory super in July 1992, the median growth fund has returned 8% p.a. The annual CPI increase over the same period is 2.7%, giving a real return of 5.3% p.a. – well above the typical 3.5% target. Even looking at the past 20 years, which includes three major share market downturns – the GFC in 2007-2009, COVID-19 in 2020, and the high inflation and rising interest rates in 2022 – super funds have returned 6.6% p.a., which is still ahead of the typical objective.”

The chart below shows that for most of the time, the median growth fund has exceeded its return objective over rolling 10-year periods, which is a commonly used timeframe consistent with the long-term focus of super. The exceptions are two periods between mid-2008 and late-2017, when it fell behind. This is because of the devastating impact of the 16-month GFC period (end-October 2007 to end-February 2009) during which growth funds lost about 26% on average.

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With many HESTA members feeling cost of living pressures, measures such as personal income tax cuts and offsets, reductions to the cost of medicines and fuel, and ongoing efforts to boost the supply of housing could provide much needed assistance.

The health and community services sector, where HESTA members predominately work, benefited from further funding for hospitals, urgent care and aged care.

HESTA Chief Experience Officer Lisa Samuels said the Federal Budget had been handed down against a backdrop of global economic uncertainty, with many Australians continuing to do it tough.

“This Budget has been delivered in a difficult environment, with geopolitical instability and persistent cost-of-living pressures shaping everyday choices for our members and many working Australians,” Ms Samuels said.

“The typical HESTA member is a 42-year-old woman earning $63,000 a year and any relief the Government can deliver is welcome.”

Ms Samuels said HESTA particularly welcomed the boost to the Low Income Superannuation Tax Offset (LISTO)^[1] being reflected in the Budget Papers, as well as the upcoming extension of Paid Parental Leave, building super contributions on Paid Parental Leave to 26 weeks.

“HESTA has long advocated for the lifting of the LISTO payment and permanently linking it to personal income tax thresholds as a meaningful step forward, particularly for those working in lower-paid caring professions. Combined with extended paid parental leave and super paid on every one of those 26 weeks, these changes will make a real difference to the retirement balances of Australia’s lowest-paid workers,” she said.

HESTA continues to call on Government to modernise the retirement phase of super so more Australians can benefit from tax-free retirement investment earnings when they are eligible, and so retirees aren’t penalised for continuing to work and contributing to Australia’s economy and communities.

HESTA modelling shows only 45% of eligible Australians voluntarily transition to a tax-free retirement account. By 2030, nearly 3 million Australians could collectively miss out on $5.44 billion in retirement savings each year by remaining in accumulation accounts.

That’s why HESTA is calling for a default retirement transition mechanism – one that could automatically move eligible members into the retirement phase, unless they opt out. This has the potential to put billions of dollars into Australian retirees’ pockets and help boost the Australian economy, while providing a strong safety net for those nearing and in retirement.

“Dignity in retirement should be for everyone. Our members have spent their working lives caring for other Australians – they deserve a super and retirement system that works just as hard for them,” Ms Samuels said.

HESTA further outlined practical ways to make the super system fairer and more flexible in its 2026-27 Pre-Budget Submission.^[2]

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Deanne Stewart

TelstraSuper and Aware Super have successfully completed their merger, less than a year since they first began to explore the proposal.

About 85,000 TelstraSuper members have now joined Aware Super via a Successor Fund Transfer (SFT) to create a superannuation fund with approximately 1.3 million members and over $235 billion in funds under management.

The two funds first announced plans to explore a merger in July last year, signed a Heads of Agreement in October and executed the SFT on 30 April.

Aware Super CEO Deanne Stewart said: “This merger is a significant achievement in the history of Aware Super and TelstraSuper and enables members to benefit from the deep retirement and advice capabilities of both organisations, greater scale and enhanced member outcomes.

“Remarkably, it has been achieved in only 9 months which speaks to the alignment of values and strong execution capabilities of both organisations.

“We are thrilled to welcome TelstraSuper members to Aware Super and excited at the opportunities ahead to help them achieve their best possible retirement.

“Our sincere thanks to the TelstraSuper Board, Executive and broader team for their dedication to their members and making the merger a success.”

Former TelstraSuper CEO Chris Davies said: “We’re pleased to see the merger successfully completed, and proud that TelstraSuper has joined with the right partner to support our members’ long‑term best interests. Aware Super shares our deep commitment to members and is well placed to continue delivering strong retirement outcomes.

“Congratulations to everyone involved across both organisations for their hard work and unwavering focus on supporting our members – now and into the future.”

Aware will continue a period of heightened support and additional resourcing over the coming weeks to ensure member questions and requests are responded to promptly.

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Nineteen super funds say they are finding getting ready for the RIC challenging.

The Super Members Council welcomes the Senate Economics Legislation Committee’s payday super regulations inquiry final report^[1], which strongly backs the start of payday super from 1 July and declares in-principle, cross-party support to close an unfair loophole denying most under 18 workers from being guaranteed super.

The denial of super for under-18s if they work less than 30 hours a week for their employer cost 515,000 teen workers nationally $405 million this financial year, the Council’s analysis shows.

Under current rules, many younger workers and some domestic workers can still miss out on super contributions, despite doing the same work as 17 million other Australians who are fully covered.

The Council has pushed to end the unfair super exclusion of under-18s and domestic workers doing less than 30 hours a week for one employer in private homes as cleaners, housekeepers and nannies.

Its analysis shows around 37,000 domestic workers missed out on super in 2026‑27, and the overwhelming majority – 86 per cent – of these low-paid workers are women.

On average, each of these workers misses out on almost $4,000 a year in super contributions, amounting to nearly $150 million nationwide, with women missing out on about $126 million in a single year alone.

A recent report by the Council^[2] found axing the 30-hour threshold would help close the gender super gap.

The current age-based minimum-hours rule means most teenage workers, especially young women who are more likely to work part-time, are not yet paid super on their wages. Women currently retire with 25 per cent less super than men, and the gap can start from their very first day at work.

The report found that if all under-18s were guaranteed super, a typical teenage girl could have nearly $2,500 more in her super by age 18, which could grow into $11,000 more by retirement with investment returns.

Universal coverage of super is critical to building a fair and effective retirement system, particularly for workers who are already at higher risk of being left behind — including young people, women, and those in insecure or part-time work.

“When something is outdated, you fix it. Fixing these outdated laws would help close the gender super gap and boost the retirement savings of thousands of hardworking Australians

“It doesn’t pass the pub test that some workers can still miss out on super because of their age or the type of work they do — that’s a gap that should be closed.”

“The Government must get on with fixing this gap as soon as possible after payday super laws are implemented.”

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Notes:
[1] Payday super regulations inquiry final report
[2] https://smcaustralia.com/reports/closing-the-gender-super-gap-under-18s/

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Andrew Groth

Boasting assets worth A$4.2 trillion, or 150 percent of GDP, Australia’s superannuation pool is among the largest and fastest growing in the world.^[1]  There are however significant challenges the industry faces, such as integrating legacy systems and maintaining operational efficiency, often while consolidating post mergers. Funds must also navigate compliance with APRA (Australian Prudential Regulation Authority) and ASIC (Australian Securities and Investments Commission) mandates, and members’ demand for timely and hyper-personalised service.

To address these aspects, funds are increasingly turning to technology, and leveraging artificial intelligence to enhance efficiency, compliance, and member experience.

Streamlining operations, compliance, and engagement with AI

AI and machine learning tools are automating back-office functions, such as data reconciliation, member communications, and internal process management, to speed up operations, minimise human error, and increase overall productivity. This delivers direct impact to member experiences.

Cloud-native data platforms unify fragmented information, offering a single source of truth to AI applications for analytical, compliance and service purposes:  AI-powered solutions are detecting, classifying, and monitoring sensitive information to enable funds to comply with data privacy regulations; they are also identifying the reasons behind underpayments, calculating liabilities, automating reporting, etc.

Two of the most critical use-cases are fraud detection and data governance.  In March 2025, several Australian pension funds were cyber-attacked simultaneously. More than 20,000 accounts were compromised and approximately A$500,000 was drained from members’ retirement savings.^[2]

This incident underscored the need for robust cybersecurity measures, such as using AI-enabled monitoring tools, to detect and automatically respond to suspicious activities in real time. By implementing an AI-based security platform, superannuation funds can help in protecting cross endpoints, networks, and cloud environments to safeguard member data and assets.

From efficiency to trust

In the superannuation business, which is built on a foundation of trust, slow or inconsistent claims processing, customer service failures and compromised security will impact member confidence and engagement. Agentic AI tools address these issues by providing 24/7 support to help guide members to self-serve with confidence and solve problems quickly – even complex or multi-step queries.

The industry can further enhance member engagement by leveraging predictive analytics to anticipate needs and behaviours – and proactively offer appropriate investment advice. For example, a superannuation fund could identify members approaching retirement and proactively prompt them with personalised guidance on retirement readiness based on their age, contribution patterns, and engagement history. Tools can also help members explore retirement outcomes using their own income, expense, and savings data. Super funds can also use AI to refine customer segments and personalise investment strategies based on members’ financial goals, life stages, and risk profiles.

Personalised digital advice services are expanding access to tailored financial guidance, with appropriate governance and oversight. At the same time, AI and machine learning are transforming portfolio management by continuously rebalancing and optimising portfolios in response to market conditions, economic developments, and individual risk preferences.

This is not to say that AI is replacing human beings. Its role is clearly supportive – bridging the shortage of human advisors, relieving employees of tedious tasks to allow them to focus on value-adding responsibilities, proposing data-driven investment decisions for human advisors to review, etc.  For example, the agents that are part of Infosys Topaz Fabric – a composable stack of AI agents, services, and models – augment humans in performing various tasks, and execute end-to-end workflows with their supervision.

Following a Responsible AI framework is important. AI augments human judgment, with clear governance, transparency, and human‑in‑the‑loop oversight, to ensure advice remains explainable, compliant, and aligned to members’ best financial interests. This approach helps build trust, mitigate bias, and ensure accountability in an environment where member outcomes and regulatory confidence are paramount.

Collaborating to enhance all-round value

To further accelerate AI adoption, Australia’s superannuation system can consider collaborating with partners offering scalable, cloud-based platforms and AI-powered tools (for scenario modelling, personalised advice, etc.)  that integrate with traditional fund infrastructure. Many large funds are collaborating with strategic technology partners to modernise operations, improve data capabilities, enhance member engagement, and deliver compliant retirement planning solutions. The bigger picture is that – by enhancing efficiency, personalisation, and insight – AI technologies are improving the financial well-being of retirees, providing the right guidance, greater engagement, and transparent insights, such as the true performance and cost of their investments.

By Andrew Groth, Executive Vice President, Asia Pacific

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Notes:
[1] https://www.db.com/news/detail/20251010-australia-s-superannuation-a-rising-global-powerhouse-in-pension-funds?language_id=1
[2] https://seceon.com/hackers-target-australias-biggest-pension-funds-may-have-breached-over-20000-accounts/#:~:text=Seceon’s%20Role%20in%20Strengthening%20Cybersecurity,including%20those%20initiated%20from%20within

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