This article was originally published in the print edition of Retirement Magazine Vol. 3 and is reproduced with permission.
A superannuation fund that does everything right in the final five years before a member retires but nothing beyond accumulation in the preceding 35 years is like a coach who only works with their client the week before a marathon.
The outcome is determined long before that final preparation begins.
Health, housing stability and social connection are just a few of the real determinants of wellbeing in retirement, and all of them are substantially shaped in the decades before the retirement date arrives.
When I wrote in Retirement Magazine late last year that the Government should relax the sole purpose test to allow super funds to play a more active role in members’ lives for this reason, it raised a few eyebrows. This doesn’t mean the sole purpose test isn’t important; it was critical at the time for a sector which was in its infancy of building wealth.
A system that has delivered extraordinary results for Australians over three decades – now managing more than $4.5 trillion on behalf of nearly 18 million people – doesn’t invite radical rethinking lightly.
The establishment of superannuation was pitched by Prime Minister Paul Keating in 1992 as a means to “materially improve the quality of life in retirement”.
A lot has changed since then and super should too if we’re going to ensure we continue to deliver on that objective.
The shift no one is fully prepared for
At CSC, we run financial literacy sessions for graduate members – young public servants and defence personnel at the very beginning of their careers.
For years, these sessions were, frankly, a hard sell. Attendance was modest and engagement was worse. Super felt abstract and distant to younger workers whose financial priorities sat elsewhere.
In the past two or three years, something has shifted. These sessions have become some of our most heavily attended member engagement events.
The questions from young members are sharper and the interest more urgent. We are seeing engagement from people in their mid-twenties that we would previously have expected only from members in their fifties.
What has changed? Many of these younger members have come to the realisation that superannuation will be their largest financial asset, sparking much earlier engagement.
When compulsory superannuation was introduced, most young Australians entering the workforce carried a reasonable expectation of eventually owning a home. That home would function, in parallel with super, as a retirement asset.
That expectation is now an exception rather than the rule.
Less than half (42%) of young people surveyed last year thought it likely or very likely that they will be able to buy a home in the future. Meanwhile, 79% of young Australians think they will be financially worse off than their parents.
In just five years, the share of household earnings going to monthly mortgage repayments has doubled.
For many people starting work today, home ownership may simply never happen. And these same people will live longer than any previous generation of retirees.
Since the inception of superannuation, the average life expectancy for a woman has increased by around five years; for men, it’s about seven years. We’re seeing this longevity in our CSC members, with around 280 of them becoming centenarians in 2025.
With ongoing advances in healthcare and technology, those numbers will extend further still for the generation now in their twenties.
They will spend more time in retirement, be active for more of it and do so without the housing security that underpinned every retirement generation before them.
The superannuation system was not designed for this cohort. The question is whether it can evolve to serve them.
The problem with waiting until retirement
Australia’s regulatory frameworks and industry attention have been almost entirely oriented toward the finish line. The Retirement Income Covenant, introduced in 2022, mandated that funds develop strategies for the decumulation phase.
The super industry has responded by investing heavily in products and services designed for people who are on the cusp of retiring. All of this matters but it only addresses part of the problem.
There is also a spending problem waiting on the other side of that effort. The Retirement Income Review found that most Australians die with the bulk of their retirement wealth intact. This is driven by many factors, including the fear of running out.
Treasury projects that by 2060, one in every three dollars paid out of the superannuation system will be a bequest. It’s currently one in every five dollars.
A renting retiree will feel that fear more acutely. Their super will need to work harder, the margin for error will be smaller, and the psychological freedom to spend will be narrower.
Super becoming a tax-friendly vehicle for intergenerational wealth transfer runs counter to its founding purpose. It doesn’t improve the quality of life of retirees; rather it forces them to live more frugally than necessary, something that has wider societal impacts.
In contrast, a financially confident retiree is more likely to be out in the community spending money, resulting in increased employment opportunities for younger people. While the societal benefits of this are clear, it could also be seen as a different way of moderating the tax impacts of a declining birth rate.
What an expanded mandate could look like
No other institution in Australia has the reach, the continuity of relationship, or the long-term financial scale to play a meaningful role in members’ lives across all of this.
What might genuine life-stage engagement look like in practice? Some starting points:
Housing: The major funds hold substantial commercial property assets while national vacancy rates are at record highs. There is a serious case for exploring how these assets could be repurposed to provide affordable, secure housing to address members’ most pressing unmet financial need. A member living in secure, affordable accommodation facilitated by their own fund would be better placed to save, better placed to plan, and better placed to retire.
Financial advice: Comprehensive financial advice remains too expensive and too inaccessible for most Australians at the moments they most need it. Funds have the scale to fundamentally change the economics of advice delivery. A modest per-member monthly levy providing access to comprehensive advice on demand would be transformative. Members who understand their finances save more purposefully, retire more confidently, and spend their savings more effectively.
Health: Partnering with insurers and preventive health providers to support members’ physical and mental wellbeing across the lifecycle – not just when claims arise – is entirely consistent with a genuine commitment to retirement outcomes. A healthier member at 65 can spend more confidently, claim less, and draw on their savings for the experiences that retirement should offer.
Superannuation’s promise was never just a number. It was a better life in retirement.
Delivering that promise – for a generation that will be renting, living longer and arriving at retirement with more uncertainty than any generation before them – will require us to think more expansively about what that promise actually means.
That conversation will be uncomfortable in places and will take bravery from both Government and the sector. And I’m sure it’ll invite some further eyebrow-raising.
But the alternative will produce a retirement crisis for a generation that deserves better. The system that built Australia’s retirement future has both the scale and the responsibility to help shape the life that leads to it.
The graduates in our seminar room, asking sharper questions than their predecessors ever did, already know something has changed. It’s time the industry caught up.
Adam Nettheim is chief customer officer at Commonwealth Superannuation Corporation (CSC), with more than 30 years’ experience across insurance, superannuation and financial advice. He holds qualifications in Business Administration and Financial Planning. He is a Fellow of the Association of Superannuation Funds of Australia (ASFA), holds ASFA’s Trustee Accreditation, is a Fellow of the Future Government Institute and a member of the Australian Institute of Company Directors.