Super funds as trusted guides

Australia’s retirement challenge is not a shortage of products. It is helping each retiree access the right combination of solutions for their circumstances. If specialist providers are best placed to manufacture some of those products at scale, the question becomes where superannuation funds can add the greatest value.

Every superannuation fund already provides the foundation retirement product, the account-based pension, which will remain the primary retirement income solution for most retirees. However, because retirement is inherently heterogeneous and personal, many members may also benefit from guaranteed lifetime income products, investment-linked lifetime income products, deferred longevity protection or a combination of these solutions.

As retirement becomes more complex, helping members navigate these decisions will become more important. Most retirees do not wake up wanting to compare mortality credits, investment-linked annuity structures, deferment periods or indexation options. They want confidence that their savings will support the lifestyle they want throughout retirement.

This is where super funds can make their greatest contribution. Funds already have trusted relationships with members, detailed knowledge of their balances and years of experience helping members navigate financial decisions. Rather than focusing primarily on manufacturing a broad range of retirement products, funds can focus on helping members understand the trade-offs between flexibility, income certainty, longevity protection, inflation protection, Age Pension outcomes and bequest objectives, and then construct a retirement strategy that best aligns with their priorities. 

Indeed, if retirement product manufacturing becomes concentrated among a small number of specialist providers, the key differentiator between funds is unlikely to be the products themselves. Instead, it may be the quality of the retirement experience they provide. Funds that help members understand their options, model different outcomes and make informed decisions are likely to create far greater value than those that simply offer a proprietary retirement product.

This shift is also consistent with the direction of the Retirement Income Covenant. Rather than maximising the take-up of any particular product, the covenant seeks to help members achieve and balance the three broad objectives of maximising retirement income, managing risks to the sustainability and stability of retirement income, and maintaining flexible access to savings throughout retirement. Achieving those outcomes requires informed decision-making as much as product innovation.

The future winners in retirement may therefore be the organisations that provide the most trusted support. In accumulation, funds help members to build wealth. In retirement, the leading funds will help members convert that wealth into the lifestyle they want.

That is where trust, guidance and decision support become the real sources of competitive advantage.

Building Australia's retirement decision-making infrastructure

If member choice is to sit at the centre of the retirement system, Australians will need better decision-support tools than are currently available.

Most retirement calculators focus on a single product or a single provider. Yet retirement outcomes are determined by the interaction between multiple components, including account-based pensions, lifetime income products, Age Pension entitlements and other sources of wealth. Members need tools that help them understand these interactions and evaluate different combinations of solutions.

A natural role exists for ASIC's MoneySmart website to provide a product-neutral retirement modelling framework that helps Australians understand the strengths, limitations and trade-offs of different retirement product types. Rather than promoting specific products or providers, such a framework could focus on the outcomes that matter most to retirees: income, flexibility, longevity protection, inflation protection, estate values and Age Pension eligibility. In doing so, MoneySmart could provide an independent and trusted foundation for retirement decision-making across the industry.

The framework should not be limited to MoneySmart. The same modelling approach could be adopted across superannuation funds and advice software platforms. Members would benefit from a more consistent understanding of retirement choices, whether they engage through a public website, their superannuation fund or a financial adviser.

Importantly, such a framework would focus on retirement strategies rather than individual products. Members could compare different combinations of account-based pensions, guaranteed lifetime income products and investment-linked lifetime income products, including alternative investment options, deferment periods and indexation approaches. Rather than directing members towards a particular provider, it would help them understand which combination of solutions is most likely to meet their retirement objectives.

A common modelling framework would allow the same retirement strategy to produce broadly consistent outcomes across MoneySmart, super funds and financial advisers, improving transparency and confidence across the system.

The need for better retirement decision-support tools is likely to become even more important as AI becomes embedded in consumer decision-making. Retirement calculators may represent only the first stage of this evolution. Emerging forms of agentic AI are already capable of helping consumers explore options, compare trade-offs and evaluate alternative retirement strategies. If retirement is fundamentally a decision-making challenge, agentic AI has the potential to become one of the most influential participants in the retirement ecosystem. Policymakers, regulators and industry participants will need to ensure that these tools improve retirement decision-making while maintaining appropriate standards of transparency, accountability and consumer protection.

Better choices lead to better outcomes

It seems clear that the challenge facing our superannuation industry is not a shortage of retirement products, but helping retirees understand which combination of products is most likely to deliver the retirement they want. Ultimately, the future of retirement should not be about steering members towards a particular product or provider. It should be about empowering Australians to make informed choices from a broad range of retirement solutions.

Looking ahead, the next frontier may not be retirement products at all, but the technologies that help consumers choose between them. As agentic AI becomes increasingly capable of assisting retirees to compare strategies, assess trade-offs and make decisions, new questions will inevitably emerge. If an AI system can materially influence a retirement decision, how should it be regulated? Where should the boundaries sit between information, guidance and advice? These questions are likely to become central to the next phase of retirement policy reform.

In accumulation, scale matters. In retirement, trust matters. The most valuable service is not selling a product. It is helping Australians make better retirement decisions and giving them the confidence to live the retirement they want.

This is part two of a two-part series on the future of retirement. Read part one here.