Building a modern retirement proposition in Australia

Australia's retirement system is entering a critical new phase. Over the next decade, 2.5 million Australians are expected to enter retirement, while more than 1.5 million fund members are already in a retirement income account, collectively entrusting almost $600 billion in superannuation assets to their respective super funds.

As a record number of members approach retirement, regulatory expectations continue to rise and scrutiny of post-retirement outcomes intensifies. In response, superannuation funds and wealth platforms are fundamentally rethinking how retirement solutions are designed, delivered and scaled. The market is shifting away from standalone products towards integrated, end-to-end retirement propositions that bring together products, advice, technology and engagement into one proposition.

This evolution is occurring with the recent release of the government's Best Practice Principles for superannuation retirement income solutions, which reinforce a clear shift from product provision to delivering measurable retirement outcomes. The principles emphasise member-centric, cohort-based solutions, with effective risk management and strong engagement across the retirement journey. Together with the Retirement Income Covenant, they provide a practical framework for super funds seeking to deliver better retirement outcomes for members and emphasises why strategic partnering is becoming essential to achieving scale, consistency and impact.

1. How leading funds are re-shaping retirement outcomes

From accumulation to retirement outcomes

Super funds increasingly recognise that accumulation success does not guarantee retirement success. Retirement is now viewed as a multi decade lifecycle, beginning well before retirement and extending through later life and estate planning. This has driven a move away from accumulation-led thinking towards whole of life retirement strategies, where:

• New pre-retirement product solutions are designed to improve earlier member engagement, optionality, potentially better financial outcomes for members and retention.
• Retirement income solutions manage longevity, sequencing and inflation risks.
• Later-life needs (aged care, estate certainty, intergenerational wealth transfer) are considered upfront rather than as afterthoughts.

Key challenges shaping strategy

Institutions face different pressures when reshaping retirement strategy. Scale and complexity are paramount. Australia's superannuation system now holds $4.5 trillion in assets, across approximately 25 million member accounts. Yet the vast majority of members approaching retirement may not be able to access comprehensive financial advice. Alternative ways to provide members with financial guidance and advice are required to achieve scale and reduce complexity.

Expectations around member outcomes have also intensified. Trustees are increasingly accountable for demonstrating improvements in income sustainability, confidence, and wellbeing, not simply product availability. This shift has been reinforced by regulatory scrutiny, particularly under the Retirement Income Covenant.

Finally, behavioural risk remains a critical constraint. Even well-designed solutions fail if members lack confidence, understanding or timely support.

2. Retirement product solutions and proposition design

The retirement building blocks super funds are prioritising

There is strong alignment across the industry on the core elements required to support better retirement outcomes at scale. The focus has shifted from single products to flexible, layered solutions that balance income security, choice and adaptability over time and meet the preferences of a more diverse membership profile due to welcoming new members from all sectors and merger and acquisition activities. Common solution elements include:

• Pre-retirement Innovative retirement income stream (IRIS) and retirement IRIS: aiming to improve financial outcomes for members and retention.
• Guaranteed and non-guaranteed retirement income streams: offering members a choice between certainty, upside participation, or a blend of both.
• Blended retirement income solutions: combining account-based pensions with only a portion of the available funds invested into lifetime income streams to assist members to effectively manage retirement risks.
• Longevity protection: explicit mechanisms to manage the risk of outliving savings, rather than relying solely on drawdown strategies.
• Capital access and estate features: maintaining appropriate liquidity to support changing spending needs, alongside clear death benefit and estate outcomes to build member confidence.

As super funds balance commercial constraints and objectives, there is growing recognition that delivering compelling retirement solutions does not require relinquishing all funds under management. Improving member outcomes and retention can be achieved through a partial, and member-appropriate, allocation to a lifetime pension rather than a full transfer of assets. Similarly, the growing range of product designs now allows funds to adopt different balance sheet approaches to best meet their commercial considerations.

3. The need for advice and guidance at scale

Advice as an enabler

Advice is central to retirement success, but comprehensive financial advice alone cannot meet growing demand at scale. Trustees increasingly recognise the need for models that extend beyond the traditional, one-to-one approach. Super funds are therefore adopting tiered advice and guidance frameworks, including:

• Comprehensive financial advice: considered the 'gold standard',but generally recognised as not scalable across a fund's entire membership.
• Digital guidance: tools, calculators and scenario modelling that help members understand options and trade-offs.
• Intra-fund and general advice: structured conversations and education to support informed decision making.
• Hybrid models: combining digital journeys with targeted human support for complex decisions.

Some of these approaches are designed to improve adviser capacity and consistency, not to replace advisers. They also aim to improve member engagement and take up, offering behavioural nudges and several pathways to purchase a retirement solution. Consequently, different forms of guidance, advice and education are now core components of a retirement proposition, not optional extras.

4. Member engagement as a core success factor

Engaging members before and after retirement

Super funds are increasingly recognising that successful retirement outcomes are shaped well before retirement. There is a strong shift towards earlier, deeper and more consistent engagement, designed to build understanding and confidence over time rather than at a single decision point. This evolution is being enabled by a growing sophistication in the use of member data, analytics and technology. Funds are moving beyond broad cohort-based communication towards hyper-personalised and customised engagement, delivered at scale through digital and technology-enabled channels. Funds are increasingly prioritising:

• Pre-retirement education that familiarises members with retirement income concepts well ahead of key decisions, supported by tailored content that reflects individual circumstances, behaviours and preferences.
• Clear, plain-language framing of retirement income, risks and trade-offs, increasingly adapted to different member profiles to reduce complexity and improve comprehension.
• Propensity-led engagement, using data and behavioural insights to identify when members are most likely to engage, which messages are most relevant, and which pathways, digital tools, guidance or advice are most appropriate.
• Consistent and connected experiences across channels, including digital platforms, advisers and contact centres, reinforcing personalised insights wherever members engage.

Through the income phase of retirement, the focus shifts from decision-making to ongoing reassurance and support, providing clear, personalised views of income, reinforcing confidence during market volatility, and adapting engagement as members' needs and circumstances evolve. Technology and digital capability enable this support to be delivered continuously and at scale. This supports a 'normalisation' of retirement concepts well before the actual retirement phase is initiated.

Success is measured not only by take-up, but by member confidence to spend, reduced anxiety, and higher satisfaction and trust, reflecting a growing understanding that retirement solutions must address behavioural and emotional needs, not just financial mechanics.

5. Why partnership has become a strategic imperative in retirement

Why funds are choosing to partner

The scale of the opportunity is significant. ASIC estimates that by 2045, two in five superannuation trustees will have more than half of their members in retirement, fundamentally reshaping operating models, technology requirements, and risk profiles.

Super funds are partnering to access specialisation (subject matter experts), accelerate speed to market, share execution risk and enable scalability through proven platforms and operating models. Partnership is no longer tactical, it is strategic. Rather than offering isolated products, Challenger supports funds to bring entire retirement strategies to life, from philosophy through to delivery at scale.

Bringing retirement propositions to market - faster and simpler

Leading super funds are moving decisively towards integrated, end-to-end retirement propositions that combine products, advice, technology, administration and engagement into a unified member experience. While the opportunity is significant, the complexity of designing and delivering these solutions at scale should not be underestimated.

Industry collaboration can help funds move from ambition to execution quickly and efficiently. Rather than requiring super funds or platforms to build an entire retirement solution from the ground up, partnership enables institutions to bring high-quality retirement propositions to market by leveraging established products, infrastructure, insights, and implementation capability. This significantly reduces complexity, shortens time-to-market and lowers execution risk, allowing focus on member outcomes and strategic differentiation.

Retirees are Australia's fastest growing demographic. By taking incremental, sequenced steps to improve retirement outcomes, super funds can enable progress, confidence, and momentum. The time for collaborative action is now.