Retirement income challenges persist

Superannuation funds' struggling to meet retirement income covenant (RIC) obligations will further test their preparedness and ability to deliver next year when major reforms take effect, as they continue to face the dual challenge of poor demand for longevity products.

- Karren Vergara

Three years since the covenant was introduced, trustees have been slammed for their lacklustre progress. ASIC recently called them out, finding that one in five cannot track the success of their assistance to members in balancing the objectives of the law.

The Association of Superannuation Funds of Australia (ASFA), however, points out that trustees are working hard to uplift outcomes for members preparing for and entering retirement.

While trustees are at different stages, ASFA chief executive Mary Delahunty says progress is being made on embedding the RIC and refining retirement-phase offerings.

Delahunty insists that most funds are on track to meet the 1 July 2026 timeline, when regulation will be updated to help funds provide more options to convert super savings into retirement income.

"[This is] provided they can continue developing offerings that are right for their members and are not constrained by product mandates," she says.

APRA-regulated funds offered 231 retirement products and 121 transition to retirement (TTR) products at the end of March 2024. They had $451 billion and $13 billion in assets under management (AUM) respectively.

At the end of FY25, the number of products in each declined by about 10%, although total AUM grew to $512 billion and $16 billion respectively.