In this guide
In the reams of reporting and commentary on superannuation, the focus is mostly on building your retirement balance in the accumulation phase of super. Historically, relatively little attention has been given to what happens next, in the retirement phase.
Many super funds have been working behind the scenes to improve their retirement income products and services. But innovation in this area has been disappointingly slow.
After completing its annual survey of pension funds, SuperRatings manager of superannuation research and insights Joshua Lowen says there hasn’t been a lot of movement in the retirement space over the past year.
“Many funds have been focusing on support and guidance by enhancing the flexibility of tools, such as retirement calculators and producing additional materials around the retirement journey,” he says.
A few have also developed annuity-style products that provide income for life or for a set period to address members’ fears about their money running out due to longevity, inflation and investment risks.
It was generally anticipated that the RIC would lead to a flurry of new pension products, but for various reasons, this has not been the case.
Instead, funds have been working on improvements to their existing account-based pension products, member communication and educational materials in the lead up to retirement and in the retirement phase.
Lifetime income solutions
In its 2026 survey of pension funds, SuperRatings found only a small number of funds had launched new pension products, most notably AMP Lifetime Boost and MLC Retirement Boost.
Lowen says these accounts act like normal accumulation accounts until a member reaches retirement age and converts their account into a lifetime pension.
“The benefit comes in the form of higher age pension entitlements by taking advantage of deemed income rates rather than actual returns,” he says.
“Members must have been using the product before starting a lifetime pension; the longer they’ve been using it, the more benefit they gain.”
More flexible super pensions
Where existing account-based pensions are concerned, the focus has been more on flexibility around pension payment set up, frequency and payment date options.
Traditionally, funds have offered payments from their account-based retirement pension products monthly, quarterly, twice a year or annually. In recent years, the trend has been towards fortnightly payments.
Lowen says the latest survey found that as of June 2025:
- 92% of funds now offer fortnightly payments, up from 86% in 2024 and 72% in 2023
- 5% of funds offer weekly payments, down from 7%
- All funds offer monthly, quarterly and annual payments
- 95% allow half-yearly payments.
More frequent pension payments allow fund members to better manage their cash flow, especially those members who also receive a full or part Age Pension. As the Age Pension is paid fortnightly, retirees could opt to receive their super pension payments on alternate weeks.
Technology is also helping to cut red tape and response times:
- 63% of pension funds enable people to open a pension account online, up from 53%
- 67% of pension funds allow partial withdrawals online (that is, occasional lump sum withdrawals in addition to regular pension payments), up from 65%.
Improvements in digital functionality have also reduced the time members can expect to wait to access their savings. Almost half of all funds (49%, up from 43%) now provide access to savings in two to three days, while 14% offer access within one day (up from 4%).
Automatic increases to pension payments
Another development SuperRatings looks at is funds that allow members to set up automatic increases in their pension payment amount. For instance, to keep up with the rise in the cost of living, you might decide to increase your pension payment by a set percentage each year or by an amount in line with inflation.
SuperRatings found that:
- 67% of funds allow members to increase their pension payment by a nominated percent each year, down from 75%
- 90% allow members to increase their payments by rises in the Consumer Price Index (CPI, a measure of inflation), a sharp increase from 80% a year earlier.
This function is particularly important when inflation is rising, as it has in recent years, to cover the rising cost of living.
Retirement bonuses
Some funds also offer some sort of ‘retirement bonus’ as an incentive for members to stick with them. The bonus kicks in when you transfer money from your accumulation account into a super pension account with your existing super fund.
Retirement bonus payments go by various names, such as pension bonus or AustralianSuper’s Balance Booster. It may be called a bonus, but it’s essentially your own money.
In a welcome development, SuperRatings found a significant increase in the number of funds offering a retirement bonus to 40% of pension funds as of June 2025, up from 29% the year before.
Some funds pay a flat percentage of your retirement balance, while others use a more complex calculation based on your length of membership and/or the investment options you were in.
Most of these bonuses are capped at $4,000–5,000, although some caps are as high as $8,000. AustralianSuper says on its website that the average bonus it paid in 2024–25 was just under $3,700.
Average pension balance rising
While it’s undoubtedly the case that there’s been too much focus on super balances and too little on retirement income, balances do matter.
Following the strong market recovery since the pandemic low in March 2020, SuperRatings found that the average super pension balance was sitting at around $356,000 in June 2025. This is up from $335,000 the previous year. Average new pension balances rose even more, to $413,000 from $370,000 previously.
Returns were better than expected in the year to June 2025, with the median Balanced pension fund (60–76% growth assets) up 11.5%.
With market volatility a feature in recent years, it’s worth remembering that super is a long-term investment even in the retirement phase. In the ten years to June 2025, the median Balanced pension option returned 7.9% per year on average, well ahead of inflation.
Yet retirees often choose to withdraw the minimum amount required under super legislation, set at 4% of your account balance if you are aged 60 to 64, 5% from age 65 to 74, then rising incrementally to 14% from age 95.
In other words, most retirees would have seen their pension account balance grow in recent years even after withdrawing a year’s pension income.
Lump sum vs pension payments
SuperRatings’ survey found 58% of members elected to receive a lump sum benefit as at July 2025, compared with 42% who started a super pension. This is a slight improvement on the figures of 60% and 40%, respectively, from the previous year.
The proportion of retirees opting to withdraw their super as a pension should continue to increase as balances rise, as many of today’s retirees have not had the benefit of compulsory employer-paid super for their entire working lives. Better retirement income products and services for retiring members should also help.
Advice reforms stall
As retirement balances increase, member retention is increasingly important for funds. Many funds are using digital technology to improve engagement as members approach retirement, with tailored communications about retirement options and advice on offer.
Lowen says funds have a complex task in educating and guiding members through their retirement. “Regulatory certainty around what advice can be given will be required before funds can fully support members.”
However, the government’s advice through super reforms has stalled in the wake of the Shield and First Guardian collapses, which drained $1.2 billion in retirement savings from 12,000 people. While the first tranche of reforms has been legislated and implemented, stage two, which included more flexible ‘new class of adviser’ rules, has been pushed back indefinitely and may need to be revised in the wake of the two retail fund collapses.
Fees down slightly
While pension account starting balances are on the rise, it’s important not to become complacent. When your financial resources in retirement are finite, every dollar counts. One factor that can be a drag on returns is fees.
The good news is that median fees have fallen slightly, with the gap between the highest and lowest fees narrowing.
The table below summarises fees for Capital Stable options (20–40% growth assets) across the main pension products in the market, using an account balance of $125,000. The top quartile indicates the cheapest 25% of funds, the bottom quartile is the cut off for the most expensive 25% of funds, and the median represents funds that sit at the halfway mark in terms of fees; that is, half of all funds surveyed are more expensive and half are less expensive.
Pension fees on a $125K account balance – Capital Stable options
| Annual fee as a % of $125k balance | Total | Member fee | Percentage-based administration fee | Investment-related fees and costs | |
|---|---|---|---|---|---|
| Top quartile | 0.63% | $790 | $0 | 0.15% | 0.35% |
| Median | 0.71% | $887 | $56 | 0.20% | 0.46% |
| Bottom quartile | 0.86% | $1,081 | $77 | 0.25% | 0.61% |
* Fees used in the analysis are as at 30 April 2026, using the most recent data available to SuperRatings at the time of preparation. Fees include percentage-based administration fees, member fees, investment management fees (including performance-based fees), transaction fees and costs, and taxes, but exclude any applicable employer rebates. Sample set is based on those options included in the SRP Capital Stable (20–40) Index as at 30 April 2026.
As you can see, the most expensive funds charge $1,081 or more compared to $790 or less for the least expensive funds in the market, a difference of $291.
Since this most recent survey, UniSuper’s decision to halve the asset-based administration fee on its Flexi Pension retirement product from 1 July 2026 may flag a round of competitive fee cuts within the industry.
UniSuper estimates more than 42,000 members in its Flexi Pension retirement product will see their asset-based administration fee halve from 0.16% to 0.08%. It says this could save the average Flexi Pension member around $495 per year. For a Flexi Pension account balance of $500,000, UniSuper says the change will see total fees and costs ($2,696) at almost half of the average pension fees ($4,900).
The bottom line
Overall, there hasn’t been much change in the retirement phase over the past year. As SuperRatings’ Joshua Lowen explains: “Take up of lifetime-income-style accounts remains very low and funds have shifted focus away from building new retirement products toward supporting members in understanding the retirement journey. However, this remains limited while funds await clarity around the future of advice.”
Leave a Reply
You must be logged in to post a comment.