More than a decade later, the problem remains largely unsolved.
The 2025 Mercer CFA Institute Global Pension Index saw Australia slip to its lowest ever ranking — seventh. This is primarily because, despite having a world-class accumulation system, the retirement phase continues to lag in design, delivery and, ultimately, outcomes.
Two releases in recent months have clarified the government’s thinking on retirement. In February, Treasury released principle-based guidance on what “best practice” retirement income solutions should look like. Meanwhile, APRA proposed a comprehensive new data collection regime to operationalise the Government’s Retirement Reporting Framework — gesturing at the kinds of retirement outcomes the regulator expects to see.
Taken together, these developments suggest that the industry is moving from strategy to execution. And as with many things in superannuation, execution will in part be a data and technology problem.
From product manufacturers to income providers
Treasury’s guidance is unambiguous on one point — best practice means offering members access to three things: a lifetime income product, an account-based pension, and lump sums.
For years, the industry has equivocated on lifetime income products. Concerns about complexity, member understanding, and low take-up have meant that many funds have deprioritised them or treated them as peripheral offerings. The implicit assumption has been that members either won’t understand them, or won’t choose them.
Treasury’s position effectively ends that debate, and positions the modern superannuation fund as providers of income through at least three different channels.
If funds are to become truly effective providers of retirement income, they need to deliver something that looks and feels far closer to a modern banking or payments platform than a traditional superannuation interface.
A retiree should be able to:
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- Log in and see a clear, consolidated view of all income streams — account-based pension payments, lifetime income payments, and any other sources (reverse mortgages, for example).
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- Understand how much they are being paid, when, and why — including how those payments may change over time.
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- Request lump sum withdrawals in a simple, intuitive way.
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- Track the status of those payments as they are processed, in near real time.
In other words, retirement income needs to be operationalised as a payments experience.
That has significant implications for technology architecture.
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- Payments capability becomes a core platform function rather than an afterthought.
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- Real-time or near real-time processing becomes more important.
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- Integration between registry systems, product engines and external providers (for example, annuity issuers) becomes critical.
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- Data models need to support multiple concurrent income streams at the member level.
Many of the industry’s core systems were not designed with this in mind. They were built to accumulate balances, not to orchestrate income.
Bridging that gap will require more than incremental change. Funds will need to entirely rethink how their platforms deliver value in the retirement phase.
The drawdown problem (and the behavioural gap)
If the first challenge is product and experience, the second is behaviour. Regulators have been increasingly clear that current drawdown patterns are not optimal. Many retirees withdraw only the legislated minimum, preserving capital well into late life — and, in many cases, dying with significant balances remaining.
The Retirement Reporting Framework makes the desired direction explicit. It includes metrics on drawdown rates, benefit payments and balance utilisation — effectively measuring whether members are converting their savings into income.
Treasury’s guidance reinforces this, suggesting that trustee-designed solutions should include drawdown pathways that exceed minimum rates where appropriate.
In simple terms, the system is being recalibrated towards an objective that can be summarised as:
maximise income in retirement by efficiently drawing down savings — ideally getting close to zero, without running out.
Achieving that balance is fundamentally a data problem. Funds will need to:
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- Segment their membership into meaningful retirement cohorts based on balance, age, behaviour and preferences.
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- Design default retirement pathways tailored to those cohorts.
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- Continuously monitor outcomes and adjust settings over time.
But behavioural inertia is powerful, and design alone will likely not be enough.
Digital solutions have a critical role to play — and here the upcoming tranche of DBFO reforms becomes particularly relevant. The exposure draft materials introduce the concept of targeted superannuation prompts: data-driven, context-specific interventions designed to prompt members towards better decisions at key moments. Applied to retirement, this could drive a far more proactive model of engagement.
In practice, this means:
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- Digital and AI-enabled advice to translate complexity into actionable decisions.
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- Intelligent defaults aligned to clearly defined cohorts.
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- Targeted prompts, triggered by member data and behaviour — for example, nudging a retiree drawing only the minimum to consider a higher drawdown, or prompting a review when balances, age or market conditions change.
Rather than relying on members to seek out information or advice, this would see funds intervening at the right time, with the right message, based on the data they already hold, and nudging members towards better outcomes.
Measuring success — and performance
Historically, success in superannuation has been relatively easy to define: investment returns, fees, and scale. In retirement, the greater range of product options makes this more complex.
The Retirement Reporting Framework begins to formalise this by introducing a set of indicators and metrics that focus on both offerings and outcomes, including product availability, take-up, drawdown behaviour and balance utilisation.
This represents a shift towards outcome-based accountability. But it is unlikely to stop there.
Large funds and industry bodies have already begun advocating for the extension of APRA’s performance test into the retirement phase. Whether or not this eventuates in its current form, the direction of travel is clear: retirement products — and more importantly, retirement solutions — will increasingly be subject to performance scrutiny.
Unlike accumulation, retirement solutions are often not single products. They are combinations — for example, an account-based pension paired with a lifetime income product — each with different risk-return characteristics, liquidity profiles and objectives.
Measuring performance in this context is not straightforward.
Funds will need to think beyond traditional product-level metrics and consider:
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- How to assess the performance of a combined retirement solution.
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- How to measure trade-offs between income stability, longevity protection and capital flexibility.
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- How to report outcomes in a way that is meaningful to both regulators and members.
This will require new approaches to data and analytics.
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- Aggregating performance across multiple product components into a coherent view.
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- Tracking outcomes over time at a cohort and individual level.
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- Developing metrics that reflect income delivered, not just returns generated.
At the same time, funds will need to broaden their definition of success to include:
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- Income adequacy — are members achieving a stable and sufficient income?
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- Income stability — how volatile are income streams over time?
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- Member confidence — do members feel comfortable spending their savings?
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- Engagement and advice uptake — are members interacting with the tools and guidance available?
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- Equity across cohorts — are outcomes consistent across different segments of the membership?
Delivering visibility over these measures requires a step change in data capability — integrating multiple data sources, enabling cohort-level analysis, and supporting real-time insight.
Funds that treat this purely as a reporting exercise will struggle. Those that embed it into how they design, deliver and refine retirement solutions may find it becomes a source of differentiation.
From intent to implementation
The retirement income challenge is not new. What is new is the level of clarity around what “good” looks like — and the increasing willingness of regulators to measure it.
Treasury has set out a principles-based view of best practice. APRA is building the data infrastructure to assess whether it is being delivered. Together, these parties are working to shift the industry from long held intent to implementation.
For superannuation funds, the question is how quickly they can adapt to the evolving retirement phase.
And as is often the case, the differentiator will not be strategy alone — but the systems, data and capabilities that turn that strategy into something members can actually experience.
Building Retirement Income: The Data and Technology Challenge is part of The Quarterly – Q3 FY26
Key Contributor:
Owen Christie
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