Measuring retirement income strategy success

6 min read
6 min read

Transforming members’ outcomes in retirement

Since the Retirement Income Covenant (RIC) was introduced in 2022, superannuation fund trustees have been required to formulate and regularly review a retirement income strategy (RIS) for their members.

The superannuation regulators – Australian Prudential Regulation Authority (APRA) and Australian Securities and Investments Commission (ASIC) – recently undertook a review of trustees’ progress so far. Some are slow to get started and others are breaking new ground.

A key finding was that trustees need to demonstrate measures of success of their RIS. This begs the question – once the RIS is in place, how will trustees measure the outcomes of their strategies?

How did we get here?

Let’s take a step back for a moment and consider how the RIC came about.

Retirement is a major phase of life. While some people make the transition from working life quite easily, others find the idea of navigating the retirement income system and worrying about how long their money will last daunting and confusing.

The Government has openly acknowledged that Australians need better access to information, advice and well-rounded retirement income products to help them navigate these financial challenges in retirement.

But to date, and with the exception of the typically closed public sector defined benefit pension schemes, the superannuation industry has predominantly focused on the accumulation phase of superannuation, where the primary objective is to maximise the risk-adjusted net returns to members over several years.

However, there’s a new sense of urgency, with an estimated 2.5 million Australians moving from the accumulation to retirement phase in the next 10 years, according to Treasury. Superannuation funds must take rapid steps to deliver tailored and effective retirement income strategies for members – a more complex and nuanced challenge than purely delivering investment returns.

What does progress look like?

For some time, superannuation trustees have been developing a multitude of solutions to tackle the retirement problem. We’ve seen changes such as a greater focus on member education, a focus on drawdown rates, enhanced advice channels and new product launches. But the problem remains unsolved.

It’s widely agreed that there is no silver bullet. The approaches taken by trustees will differ, as will their members’ needs, but the industry knows that solving the retirement problem would create a world-leading pension system in Australia. The Mercer CFA Institute Global Pension Index 2023 states that “very few systems have solved the dilemma of how to move from an individual-based DC accumulation system to a post-retirement system that provides adequate and secure income to retirees while also providing them with the same flexibility that was available during their working years”.

According to the RIC, implementing a successful retirement income strategy (RIS) will help members achieve three objectives:

1. Maximise retirement income.
2. Manage the stability and sustainability of that income.
3. Provide flexible access to capital.

While APRA and ASIC‘s review highlighted a perceived lack of progress and urgency from superannuation fund trustees, there are pockets of positivity. Some trustees are demonstrating a clear commitment to the RIC and innovation in their approach and solutions.

“The RIC is a step along the journey ensuring that the retirement outcomes of members are a high priority for all RSE licensees.”

Three pillars of success

APRA and ASIC’s review called out three areas for trustees to benchmark their strategies and identify areas of improvement.

1. Understand members’ needs

Identify gaps in member data. Integrate external data sources with internal information and use these insights to better understand how members’ financial positions and behaviours change throughout retirement.
Define membership cohorts to draw a deeper analysis of member outcomes.
Develop member sub-classes based on more than just superannuation account balance and age to provide more relevant services and products. This will also help trustees demonstrate that their RIS is tailored to each cohort.

2. Design fit-for-purpose assistance including products

• Consider developing tailored assistance or services based on the different challenges faced by each membership segment.
Develop an integrated product suite that’s appropriate for the membership profile and helps guide members to make decisions that will improve their retirement outcomes.

3. Oversee strategy implementation

Align the RIS with the superannuation fund’s broader strategy so it’s integrated across the organisation with a clear pathway to implementation.
Develop both qualitative and quantitative measures for the effectiveness of the RIS in improving members’ retirement outcomes over time.

Developing metrics to measure the outcomes

APRA and ASIC have encouraged trustees to develop a roadmap setting out how they will develop success measures for their RIS over time and improve their use of data analytics and modelling to assess member outcomes.

Trustees should demonstrate how the RIS has led to appropriate member outcomes, with a variety of measures to assess the success of the RIS, how retirement outcomes can be improved, and how the trustee helps members better achieve and balance the three retirement objectives set out in the RIC.

The ideal solution should include a mix of specific, measurable, quantitative and qualitative metrics such as changes to the rate of regular pension drawdown and member confidence in meeting their retirement goals.

No trustee has yet shown absolute competency in this area and in APRA and ASIC’s thematic review they found that “the majority of RSE licensees lacked metrics to assess the retirement outcomes provided to members”. But that could be about to change…

By way of example, in response to the regulators’ requirements set out in the RIC, Mercer has developed a scorecard to help superannuation fund trustees and their management teams measure the success and effectiveness of their retirement strategy in improving their members’ outcomes in retirement. It allows trustees to:

• understand where they are now compared to where they want to be when developing and implementing an effective retirement income strategy, and
• measure the improvement of their members’ retirement outcomes over time.

The scorecard aims to synthesise the complexity of retirement assessment into simple but meaningful outputs for trustees and their management teams. This is a critical input in an overall retirement strategy that will not only allow trustees to assess their current state, but importantly how their strategy continues to improve overall retirement outcomes.

It’s a model that factors in the unique attributes of each superannuation fund and recognises that not all funds have the same end goal. Instead, it focuses on helping trustees decide how to use their finite capital and people resources.

The scorecard has three sections – benefits (such as income, investment performance and capital access), member support and offerings (products and costs, for example).

Mercer’s scorecard enables trustees to capture the complexity of the retirement problem within simple but meaningful outputs. Unlike some of the other tools being developed, Mercer’s scorecard combines both qualitative and quantitative weighted measures and detailed metrics. We can proactively work with trustees to customise the weighting of each measure and metric based on their strategic priorities.

Trustees are working hard to enhance their retirement strategies and the next step is to measure the impact of these strategies on the retirement outcomes delivered to members.

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Derek Thompson

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Best Selling Author, Podcast Host of 'Plain English'

Sessions

Keynote 8 – Navigating the energy transition: opportunities, investor strategies and policy needs

Few speakers can match Derek Thompson‘s ability to synthesize mega-trends in society, labor, economics, technology, and politics. Put another way: Derek trawls the data sets and does the forecasting and deep reporting necessary to help us better understand how we live, how we vote, how we spend, and how we work.

In his paradigm-shifting #1 New York Times bestseller, Abundance (co-written with Ezra Klein), this award-winning journalist reveals how our policies and culture have pushed us into a world of scarcity (not enough housing, workers, or progress)—and offers a radical new path towards a world where housing is affordable, energy is plentiful, and innovation flourishes across industries.

He shares a compelling vision of a future where we have more than enough for everybody, and a practical, actionable roadmap for how to get there. It starts with taking more risks, building more expansively, and recognizing that we all have the power to create a world of abundance. “Everything’s utopian until it’s reality,” he says.

Carmen Beverley-Smith

Executive Director - Superannuation, Life & Private Health Insurance, APRA

Sessions

Keynote 8 – Navigating the energy transition: opportunities, investor strategies and policy needs

Carmen joined APRA in March 2023 and holds the role of Executive Director, Life and Private Health Insurance and Superannuation.  

She has had an esteemed career in financial services, spanning over 25 years. She has held diverse leadership roles at Westpac and Commonwealth Bank of Australia, including across risk, transformation and change, product and portfolio development, and sales and service. 

Prior to joining APRA, she held the role of General Manager, Risk Transformation Delivery Integration at Westpac. This involved leading the group-wide implementation of a suite of solutions to uplift risk management capability and develop data, analytics and reporting. 

Carmen leads with a values-driven approach and a particular interest in developing and mentoring talent. 

She holds a Bachelor of Commerce and Accounting, is a certified Chartered Accountant and a Graduate of the Australian Institute of Company Directors. 

Amy C. Edmondson

Novartis Professor of Leadership and Management, Harvard Business School

Sessions

Keynote 8 – Navigating the energy transition: opportunities, investor strategies and policy needs

Amy C. Edmondson is the Novartis Professor of Leadership and Management at the Harvard Business School, a chair established to support the study of human interactions that lead to the creation of successful enterprises that contribute to the betterment of society.

Edmondson has been recognized by the biannual Thinkers50 global ranking of management thinkers since 2011, and most recently was ranked #1 in 2021 and 2023; she also received that organization’s Breakthrough Idea Award in 2019, and Talent Award in 2017.  She studies teaming, psychological safety, and organisational learning, and her articles have been published in numerous academic and management outlets, including Administrative Science Quarterly, Academy of Management Journal, Harvard Business Review and California Management Review. Her 2019 book, The Fearless Organization: Creating Psychological Safety in the Workplace for Learning, Innovation and Growth (Wiley), has been translated into 15 languages. Her prior books – Teaming: How organizations learn, innovate and compete in the knowledge economy (Jossey-Bass, 2012), Teaming to Innovate (Jossey-Bass, 2013) and Extreme Teaming (Emerald, 2017) – explore teamwork in dynamic organisational environments. In Building the future: Big teaming for audacious innovation (Berrett-Koehler, 2016), she examines the challenges and opportunities of teaming across industries to build smart cities. 

Edmondson’s latest book, Right Kind of Wrong (Atria), builds on her prior work on psychological safety and teaming to provide a framework for thinking about, discussing, and practicing the science of failing well. First published in the US and the UK in September, 2023, the book is due to be translated into 24 additional languages, and was selected for the Financial Times and Schroders Best Business Book of the Year award.

Before her academic career, she was Director of Research at Pecos River Learning Centers, where she worked on transformational change in large companies. In the early 1980s, she worked as Chief Engineer for architect/inventor Buckminster Fuller, and her book A Fuller Explanation: The Synergetic Geometry of R. Buckminster Fuller (Birkauser Boston, 1987) clarifies Fuller’s mathematical contributions for a non-technical audience. Edmondson received her PhD in organisational behavior, AM in psychology, and AB in engineering and design from Harvard University.

 

Daniel Mulino MP

Assistant Treasurer and Minister for Financial Services

Sessions

Keynote 8 – Navigating the energy transition: opportunities, investor strategies and policy needs

Born in Brindisi, Italy, Daniel was a young child when he moved with his family to Australia. He grew up in Canberra and completed his first degrees – arts and law – at the ANU. He then completed a Master of Economics (University of Sydney) and a PhD in economics from Yale.

He lectured at Monash University, was an economic adviser in the Gillard government and was a Victorian MP from 2014 to 2018. As Parliamentary Secretary to the Treasurer of Victoria, Daniel helped deliver major infrastructure projects and developed innovative financing structures for community projects.

In 2018 he was preselected for the new federal seat of Fraser and became its first MP at the 2019 election, re-elected in 2022 and 2025. From 2022 to 2025, Daniel was chair of the House of Representatives’ Standing Economics Committee in which he chaired inquiries; economic dynamism, competition and business formation and insurers’ responses to 2022 major floods claims.

In 2025, he became the Assistant Treasurer and Minister for Financial Services.

In August 2022, Daniel published ‘Safety Net: The Future of Welfare in Australia’, which aims to explore the ways in which an insurance approach can improve the effectiveness of government service delivery.