How can super funds help us retire happy? Here are eight ideas

Never before has Australia had so many people interested in retiring simultaneously. There are over 4.2 million retirees in Australia, but only about 1.3 million have shifted their superannuation into the retirement phase.

This means most super funds are not yet accustomed to managing the needs of retirees and the outflow of funds via pensions in large volumes. They also haven’t felt the pressure to educate people about spending their money in retirement. However, the winds of change are gathering.

Your super fund shouldn’t leave you hanging as you approach retirement.Credit: Simon Letch

Seven hundred thousand Australians are projected to retire in the next five years. While this number might not seem overwhelming, when combined with the 2.9 million retirees not technically in the retirement phase who may start using their super funds as intended, the industry faces a significant shift in demand for retirement products and services.

The government has been nudging the superannuation system and funds of all kinds to prepare for this shift. In 2018, they legislated for the introduction of retirement income products to help consumers manage their money over longer lifespans.

They also required funds to have a retirement income strategy by July 2022, aiming for improved retirement outcomes for consumers. By July 2023, they reviewed the pace at which funds were implementing their strategies and pointed out that most weren’t moving fast enough.

But what does that really mean for us everyday people? According to the 2024 Allianz Retire+ Epic Retirement Planning Survey, 57 per cent of retirees said they were happy with their fund’s support of the retirement process. That number isn’t high enough.

Proactive funds are the ones actively building retirement income products, financial advice, education, and tools suited to their members.

Frankly, the government can only push funds so far. After that, it’s up to us, the everyday people who want good products and services at retirement, to take action and vote with our feet. We need to know how to identify a good super fund at the retirement phase from a less effective or even lazy one. Today, I’m going to teach you what I look for.

Here are eight things that we, as ordinary people looking to use our superannuation fund’s services in pre-retirement and retirement, should understand and watch for as our funds improve in the retirement phase. These services might not all be available now, but you’ll be able to tell if they’re making progress.

1. Investment options with competitive returns. Your fund has probably already mastered getting good investment returns in the accumulation phase. If they have, then your returns in the retirement phase at the same risk level should be higher because it’s a CGT and income tax-free phase.

You should monitor your fund’s performance by benchmarking it against the top 10 performers in the retirement phase at the same risk level every year. Finding this data can be tricky as there are no government benchmarks.

I published a report here on last year’s top performers to help. For instance, the top ‘growth’ fund in the retirement phase in 2022/23 was Brighter Super’s Optimiser Multi-Manager, Growth, with a 14 per cent return. Over 10 years – a far more important benchmark – CSCi Aggressive and Hostplus Balanced Growth both topped with 10 per cent returns, according to Chantwest.

2. Fair fees. Fees eat away at your returns and slow down the compounding of your money, but benchmarking fees in the retirement phase is difficult due to the lack of public data.

For now, you can calculate your fees as a percentage of your balance and compare them with accumulation phase fees at the same risk level using resources like the YourSuper comparison website. If they’re high, ask yourself why. Ask your fund too.

3. Retirement phase products. Most superannuation funds offer retirement phase products, the most popular being account-based pensions. Some are starting to build ‘lifetime income’ products to sit alongside these, into which you can invest a portion of your retirement savings and get a guaranteed income for the whole of your life, even if you live much longer than you expect.

It’s like having life insurance for a long life, rather than a short life. Many funds also offer term annuities and term deposits, though these are not always heavily promoted. This is likely to change as the number of retirees increases.

4. Education. One of the fundamental tenets of the retirement income covenant was ‘fit for purpose’ assistance for members approaching, and in, retirement. Education is one place where funds can really do right by their members.

When members understand what happens in the retirement phase, how money works, what decisions need to be made and how the systems of retirement support them, they can feel a lot more confident about using their money in retirement.

I project that they also make better long-term decisions because they won’t be as easily tricked by slick operators. So look twice at the education offered by your fund. Is there any? Are you using it? Does it help you navigate retirement?

5. Financial advice. Superannuation funds are waiting on government legislation to offer better quality advice to members approaching retirement. As the rules change, you’ll have access to various types of advice from your fund – some free and some paid – all of which must be in your best interest.

It’s important to evaluate the quality of the advice you receive. If your fund merely listens, reads a script, and hands you a pile of complex investment options without taking the time to explain and help you understand, they’re missing the point. Quality advice should be clear, personalised and genuinely helpful in guiding you through your retirement planning.

6. Nudges. Superannuation funds, with new advice legislation, will be encouraged to ‘nudge’ you in the right direction as you approach retirement age. See this as a helpful reminder of important tasks rather than annoying marketing, and appreciate your fund if they do it.

7. Care and empathy. Retirement is a significant phase of change. Funds need to recognise their role in supporting you during this time. Look for funds that show genuine care and help you make the best of your retirement. Some funds will build innovative offerings over the coming years – watch for them.

8. Support for the less fortunate or less literate. Every super fund has members in more difficult situations. It’s important that these people don’t get left behind. If you’re one of them, look for funds that offer initiatives to support people who might prefer to avoid dealing with financial complexities.

Finally, bear in mind that some funds are not focusing on retirement, having chosen to prioritise younger members. Others might advertise their retirement services heavily but offer little substance.

The proactive funds are the ones actively building retirement income products, financial advice capabilities, education, and tools suited to their types of members. Knowing the difference will help you choose a fund with the products and services you need and want in the second half of your life.

Bec Wilson is the author of the bestseller How to Have an Epic Retirement. She writes a weekly newsletter at epicretirement.net and she is the host of the Prime Time podcast.

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making financial decisions.

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