Focusing on super’s retirement phase

Rise of the Retirement Phase in Super

As the superannuation system in Australia continues to mature, we are observing a shift in focus for super funds from the accumulation phase to the retirement phase.

Figures from the Federal Government’s 2021 Intergenerational Report project that the value of superannuation assets under management in the retirement phase are set to increase from $0.6 trillion in 2021, to over $1 trillion by 2032 and to a whopping $3.5 trillion by 2060!

The inexorable rise in importance of the retirement phase vs the accumulation phase is driven by these simple facts:

  • The maturing of our compulsory defined contribution super system starting only 30 years ago
  • The baby boomer bubble – a large cohort of retirees in recent and coming years
  • Increasing compulsory contributions
  • Voluntary contributions from tax incentives
  • Strong investment returns

Rise in demands and expectations of retirement – opportunities and challenges

While the cost of living increases, many retirees – particularly the recent and soon-to-be retirees, have:

  • High expectations of service capability from their super funds
  • Increased funds to support their lifestyles compared to older retirees
  • A need for retirement advice, both financial and lifestyle

Super funds need to be able to maximize after-fees, and after-tax (credits) investment returns to provide retirees with the best possible retirement withdrawal and income stream benefits.  They also need to meet their retired members’ increasing retirement service expectations – across ease of access to information and funds, advice, and a range of benefit options to best fit their individual changing circumstances over time.

A key part of this is addressing the basic question many retirees ask themselves.  How long will my Super money last?  This depends on:

  • The current balance in their super account
  • The aged pension they receive
  • Their living expenses and aspirational spending needs
  • Their age, gender, and
  • Many other unknowns outside the control or data collecting ability of the Superfund, such as household numbers situation, investments outside super, home ownership etc.

Super funds need to be able to provide income streams that meet their retired members’ financial security and benefit their best financial interests. To do this, super funds need to find ways to reflect their members’ current and future financial circumstances reasonably accurately. This is difficult to near impossible in full, but needs to be attempted; acknowledging the limitations to help members to achieve their retirement needs.

So what should Super Funds do now?

  1. Make the mindset change from a focus on super accumulation and support insurance during a member’s working life, to providing retirement income and longevity assurance.
    Ensure a retirement income-centric approach is reflected in all the fund’s governance and management to truly embody the objective of Super as per the Treasury’s current consultation paper – “to preserve savings to deliver income for a dignified retirement …”.
  2. Make the big investments now in the specialist skilled professionals and the systems that will enable you to deliver the best retirement phase solutions and support for members.
  3. Consider whether you should merge to create or be part of a larger fund to provide the scale necessary to deliver enhanced retirement phase outcomes and services
  4. Relentlessly focus on reducing costs by improving efficiency, avoiding corporate bureaucracy creep, and closely monitoring and reporting cost statistics.
  5. Leverage technology to provide good value advice to all your members, particularly around retirement planning.


Sean and Daniel



Sean, Daniel and the team at McGing Advisory & Actuarial provide a wide range of consulting services across superannuation, wealth management, life insurance, actuarial, risk management, investments and governance.