For the five million Australians facing retirement in the next decade, the experience will be vastly different from generations before with more education, product solutions and guidance to help them make the best choices to finance their lifestyles beyond the account balance and age pension.

It is universally accepted Australian pension funds have done a stellar job in accumulation since compulsory superannuation came into being 31 years ago. The scale of the market cannot be underestimated − assets under management are now $3.4 trillion, dwarfing the size of the Australian economy.

Australia’s retirement market is still in its infancy despite the enacting of the Retirement Income Covenant in July 2022. Fund trustees have been under pressure to develop strategies to assist members maximise retirement income.

HostPlus group executive for member experience Paul Watson admitted in a recent interview the industry is tackling the most difficult problem in finance, which is to stretch a member’s money over the course of their lifetime. The industry terms this as longevity risk.

With close to half a million members in retirement or moving into it, AustralianSuper plans to launch its own retirement solution in the next two to three years, its chief officer retirement Shawn Blackmore told Investment Magazine recently. 

Jacki Ellis

Similarly, AwareSuper is also developing a longevity product for members, according to head of retirement segment Jacki Ellis.

“We are looking to weave together for members, the right retirement solution to meet their needs and their personal goals in retirement,” Ellis says.

Aware is one of the largest industry funds for members in the retirement phase with $30 billion of assets managed in the retirement phase for over 100,000 retirees. It expects to see an additional 100,000 members retiring over the next four years.

More advanced 

Funds such as Australian Retirement Trust, HostPlus and UniSuper are more advanced in the execution of their RIC strategy.

The $240 billion ART was formed through the merger of SunSuper and QSuper which both had their own retirement products. These legacy products will be merged into a single one next year according to its head of advice Anne Fuchs.  

From July 1, ART will standardise the retirement income bonus which each product offers for members who roll over their accumulated savings in superannuation into an ART retirement income product. The bonus will rise to $9,000 from July from a range of $1,000 to $7,000.

Ian Lorimer

Meanwhile, UniSuper is among a smaller cohort of super funds who manage money in both defined contribution and defined benefit schemes. The fund has over 42,000 retired members drawing an income. Close to 80 per cent of these retirees are in its allocated pension product with the remainder spread across its defined benefit product and fixed rate indexed pension, representing around $28 billion of assets under management.

“We’ve already had a longevity product that’s unique in the market that we’ve had for 20 odd years,” UniSuper’s head of retirement Ian Lorimer tells Investment Magazine.