Navigating the retirement phase

Good afternoon, everyone. I’m Jane Magill and I’m pleased to join you here today.

Like many of you, I recently went to see Chris Nolan’s film The Odyssey.

For fund members, navigating the unfamiliar waters from accumulation to the retirement phase of super may not be as treacherous a journey as Odysseus’s return to Ithaca.

Yet, there are still momentous decisions to be made, complex paths to negotiate, and the siren calls of scams and fraud to avoid.

It’s a journey that an increasing number of fund members are on. We estimate that accounts held by members who have reached preservation age will grow by an additional 3.9 million over the next 10 years.

Navigating the unknown waters into retirement

As your fund members contemplate a life in retirement, one of the most significant decisions they face is what to do with the superannuation they have accumulated throughout their working lives.

While you can’t make these decisions on behalf of your members, you can and, indeed, are obligated under the Retirement Income Covenant to play a critical role in developing the strategies and tools to educate and support members in mapping out their path ahead.

For the past four years, at this event, in our meetings with you and other forums, discussions have rightly focused on the progress you’ve made in implementing the covenant’s requirements.

You can expect these important conversations to continue, as both APRA and ASIC push hard to close the gap between those trustees who have embraced the spirit of the covenant and the competitive advantages that brings, and those who have not.

You can also expect us to remain focused on product innovation and transparency.

To help support product innovation, APRA has changed the capital treatment of longevity products, effective as of the first of July this year.

This is intended to foster a more vibrant and competitive annuity market.

And we will continue to increase transparency of the actions being taken by trustees to support their members through APRA’s implementation of the Government’s Retirement Reporting Framework. In doing so, we remain mindful of the need to minimise unnecessary regulatory burden.

Helping your members negotiate the uncertainties of the transition to retirement is more than a regulatory priority.

It’s what your members expect from you.

And for those that get it right, a strong competitive advantage.

Beyond the shores of the Retirement Income Covenant

Just as Odysseus’s arrival in Ithaca was not the end of his story or his troubles, the arrival of fund members on the shores of retirement is not the end of their challenges or your obligations as their trustees.

Significantly higher levels of members and savings in the retirement phase of super will require increased industry focus, including in areas beyond the Retirement Income Covenant.

Operational resilience

The first is operational resilience.

More members in retirement mean more members engaging with their funds and making more frequent and more consequential transactions.

Members should have confidence that their pension payments will arrive on time, their retirement balances will be protected from poor investment practices, administrative errors or malicious cyber activity, and that they will be able to withdraw or transfer their balances without unnecessary issues or delays.

These expectations place an even greater premium on your adherence to APRA’s operational risk standard, to build resilience in your systems and controls, and the effectiveness of your oversight of service providers.

The emergence of frontier AI represents potential operational benefits, but it also amplifies risks including cyber risks and scams.

For years now, APRA and other agencies have pushed trustees to strengthen their cyber controls and the persistent weaknesses exposed by last years’ credential stuffing attacks.

Greater industry collaboration on this issue is important, especially in areas such as information sharing but, ultimately, you are responsible for the effectiveness of your funds’ cyber controls, the protection of your members’ assets and the ability to contain and recover from any potential attack.

Members in retirement are increasingly attractive targets for bad actors because they often hold larger balances, have greater flexibility to access their savings and may be looking for investment opportunities to boost their retirement savings.

For example, Australians aged 55 and over are the most vulnerable to investment scams, losing a total of $90 million in 2025, according to the National Anti-Scam Centre,

Investment governance

Investment governance also requires different considerations in the retirement phase.

When members are decades from retirement, there is generally time to recover from periods of market volatility.

Retirees often have less capacity to do so.

For members drawing an income stream, sequencing risk, inflation risk and longevity risk can have a much more immediate impact on financial wellbeing.

The question is no longer simply whether balances are growing.

It is whether investment settings and retirement solutions remain aligned with retirees' objectives, risk tolerances and income needs.

Of course, members have very different needs and preferences, so there can be no ‘one size fits all’ solution.

Strong investment governance in retirement means thinking carefully about how products, strategies and member support frameworks help retirees navigate a different set of risks from those faced during accumulation.

Liquidity management

The final area is liquidity management.

APRA’s overarching assessment and starting position, per our recent system-risk stress test, is that the Australian financial system is resilient to market and liquidity shocks. The system-risk stress test also reinforced the central role that the superannuation sector can play as a stabilising feature of the Australian financial system.

However, we are also cognisant that as the superannuation system matures and more members enter retirement, the nature of liquidity demands will gradually evolve.

Our core view is that there is there is time for the superannuation system and trustees to adjust. While we are seeing growth in retirement assets in dollar terms, retirement assets’ share of the overall superannuation pool continues to track at around one-quarter.

Further, according to Mercer estimates, total system contributions will continue to exceed outflows for around a decade.

However, it is important to not be complacent, for two reasons.

First, individual trustees – especially those with older membership bases and less favourable competitive flows – will face pressures earlier than the system as whole.

Secondly, while not observed historically, there is the downside risk that changes in member behaviour, for instance in response to major market movements, could have material implications for trustees’ liquidity management nearer term.

The focus should be on understanding member behaviour, monitoring emerging trends and ensuring liquidity frameworks remain fit for purpose in a system that is becoming increasingly retirement focused.

Conclusion

Helping members navigate the transition to retirement remains one of the most important challenges facing the superannuation industry.

But stewardship does not end when members arrive.

Just as Odysseus's arrival in Ithaca was not the end of his story, a member's transition into retirement is not the end of your responsibilities as trustees.

As more Australians enter retirement with larger balances than previous generations, trustees will increasingly need to adapt their approaches to meet the needs of a more mature superannuation system.

Because retirement is not the end of the story.

And neither is your responsibility to the members whose financial futures have been entrusted to your care.