Australia's superannuation system is at risk of disadvantaging vulnerable members, creating a gap between the legislated promise of dignity and the lived reality of retirement.
Australia's superannuation system holds more than $4.3 trillion in retirement savings , making it one of the world's largest pension systems. As millions of baby boomers transition into retirement, the industry faces its greatest test: supporting potentially vulnerable members through the most complex financial decisions of their lives.
Yet cracks are appearing in the superannuation system's design and implementation, with regulators such as ASIC highlighting shortfalls in what is expected of superannuation funds and communication with members who may be more vulnerable.
These include victims of elder abuse or those suffering from cognitive decline, through to culturally diverse members or those who may be living in Indigenous or remote communities, according to UNSW Sydney experts who have studied structural gaps in the nation's retirement framework.
Redefining vulnerability in Australia's retirement system
The traditional understanding of vulnerability in superannuation is far too narrow, and retirement circumstances vary dramatically from individual to individual, said Katja Hanewald , Associate Professor in the School of Risk and Actuarial Studies at UNSW Business School.
"People differ widely in wealth, health, and family situations and must navigate complex decisions as they enter and move through retirement," explained A/Prof. Hanewald, noting that this complexity extended beyond simple demographics.
Retirees, for example, needed to coordinate superannuation with the Age Pension, aged care, or family transfers, A/Prof. Hanewald said. Unexpected health shocks or cognitive decline could make these decisions exponentially harder.
Scott Donald , Associate Professor in the School of Private & Commercial Law at UNSW Law & Justice, also highlighted the vulnerability of superannuation fund members experiencing declining cognitive ability or practical autonomy.
Some lacked the ability to use the internet or access online banking services which, he said, created barriers to managing their retirement savings.
A/Prof. Donald identified other vulnerable groups that the system routinely overlooks. Significant categories included those working in the cash economy or casualised roles, or those living in Indigenous or remote communities.
"These are people for whom the superannuation system does not work," said A/Prof. Donald, who previously worked in the funds management industry advising governments, superannuation funds, insurance companies and fund managers on investment strategy, governance and regulation.
"It's neither designed in a way that really supports them, nor does the way it's been rolled out or the infrastructure in the system, the way the superannuation system actually works, help."
These overarching issues highlight the important concept of dignity in retirement, added A/Prof. Donald, who argues that dignity is about more than merely the amount of money you have when you retire.
The concept of dignity as avoiding humiliation proves especially relevant for vulnerable members. A/Prof. Donald warned that over-zealous imposition of default settings (perhaps justified on the basis of cognitive limitations older Australians may develop) could treat older members like children who couldn't be trusted to make their own decisions.
Regulators are concerned - and taking action
The concerns raised by A/Prof. Hanewald and A/Prof. Donald were recently highlighted by the Australian Securities and Investments Commission (ASIC), which released a report about retirement communications .
It revealed that some super funds, collectively responsible for millions of members' savings, lacked urgency in improving how they communicated with retirees, despite over 1.5 million members already in the retirement phase holding approximately $575 billion in assets.
ASIC Commissioner Simone Constant delivered a clear message to the industry, noting that only one-third of Australians approaching retirement felt confident about their financial future.
And with more than 2.5 million Australians set to enter retirement over the coming decade, the stakes are increasingly significant, said Fei Huang , Associate Professor in the School of Risk and Actuarial Studies at UNSW Business School.
Her research into socio-economic longevity gaps exposed deep structural inequalities within the retirement system.
"At age 60, males in the least advantaged socio-economic groups on average live 11.5 years fewer, and females 9.1 years fewer than their most advantaged peers," revealed A/Prof. Huang.
These gaps closely correlate with area-level disadvantage, income, home ownership, and marital status, meaning members who are single, renting, on lower incomes, and living in disadvantaged areas face systematically shorter retirements despite contributing for decades.
This longevity inequality represents more than marginal differences; it constitutes a key indicator of vulnerability that should fundamentally inform how funds communicate with members and design retirement solutions.
Uniform pricing and product design, while appearing neutral, actually exacerbate inequality and undermine confidence in retirement income products, said A/Prof. Huang, whose research focuses on responsible AI and data-driven decision-making, with particular emphasis on insurance, risk management, and actuarial applications.
"Funds should not assume that members are homogenous - financially literate, healthy, and equally long-lived. Our research shows this assumption can produce structurally unfair outcomes," she explained.
Funds should not assume that members are homogenous - financially literate, healthy, and equally long-lived. Our research shows this assumption can produce structurally unfair outcomes
Where superannuation funds continue to fall short
A/Prof. Hanewald observed that some funds still relied on generic, product-focused messages timed around pre-retirement, rather than addressing the ongoing needs of already-retired members or those facing difficult personal circumstances.
This point was noted in ASIC's October 2025 report , which found that, among 12 major superannuation trustees - responsible for 9.3 million accounts and $1.14 trillion in assets - none had developed specific communications for vulnerable or culturally diverse members.
A key challenge facing super funds involves member information, such as incomplete or unavailable data about relevant life or financial affairs. The Super Members Council recently noted that targeted government data sharing would help funds identify potentially vulnerable members.
Another barrier facing superannuation funds is the delay in introducing the Delivering Better Financial Outcomes legislation to Parliament. When enacted, this will help empower super funds to deliver better information, guidance and advice to members as they retire.
A/Prof. Hanewald noted that one ongoing challenge facing superannuation funds was highlighted in ASIC's death benefit review , which revealed slow and inconsistent claims handling. Members in some funds wait months (or even years) for resolution, and ASIC has actively investigated this issue - with some funds paying millions to beneficiaries as part of a compensation program.
Another common shortcoming is based on an assumption that everyone can use websites or has ready access to online services, which A/Prof. Donald said was particularly problematic.
"This isn't necessarily the funds' fault, but we've got a system in which some key decisions get made at times when we're not really very well, and/or not very capable of making them," observed A/Prof. Donald, who explained how important choices coincided with emotional upheaval from a spouse's death, impending retirement, or declining health.
Building solutions within regulatory boundaries
Despite these challenges, there is scope for improvement within existing regulatory frameworks governing superannuation funds.
A/Prof. Hanewald stressed the importance of timely and responsive communication, noting that improving response times required stronger internal systems, clear service standards, and better oversight of outsourced administrators.
"Funds should also invest in staff training and ensure communication is accessible, culturally appropriate, and written in plain language," A/Prof. Hanewald advised.
Over time, trustees need to build better data and feedback systems to understand member needs and evaluate whether their support and communication processes prove effective.
A/Prof. Donald also said multilingual materials need to address linguistic barriers, while funds should also employ alternative engagement methods for older Australians to avoid the technological challenges of multi-factor authentication processes.
Advisory services need to help people understand choices - well in advance - about power of attorney and future decision-making, ideally in members' 50s or early 60s.
Some funds have also taken a proactive approach to helping members targeted by questionable schemes that promise better performance, warning about potential scams while carefully navigating defamation and advice restrictions, he added.
The consequences of inaction
The risks of superannuation funds maintaining the status quo extend beyond regulatory compliance.
A/Prof. Hanewald warned that without timely and clear information, retirees might make poor drawdown or investment choices, miss insurance entitlements, or delay critical financial decisions.
"Prolonged uncertainty about retirement income can cause significant stress and reduce confidence in managing money later in life," she observed.
For bereaved families, slow or inconsistent communication around death benefits compounds grief and creates financial hardship at vulnerable times.
She said these experiences eroded trust in the superannuation system, particularly among members already facing barriers such as language, health, or digital access challenges.
A/Prof. Donald highlighted elder abuse as a clear and growing risk, manifesting in other ways beyond simple asset transfers.
More subtle manifestations included not taking advantage of social security benefits or making arrangements to inherit superannuation, while parents miss out on retirement savings benefits.
He explained that the challenge lies in addressing individual circumstances with multiple dimensions, requiring a holistic understanding beyond a super fund's typical scope.
System-level consequences were also a concern, said A/Prof. Huang. Uniform design perpetuated hidden cross-subsidies where vulnerable members effectively subsidised wealthier, healthier ones.
"Over time, this undermines trust in the superannuation system, amplifies inequality, and weakens policy goals such as retirement adequacy and sustainability," A/Prof. Huang said.
"Without fairness built into product design and communication, the retirement system itself becomes a driver of inequity rather than a remedy."
Finally, superannuation industry professionals need to recognise that solutions require investment.
A/Prof. Donald cautioned against simplistic cost comparisons with international systems, noting that providing meaningful services to help vulnerable members understand their options and establishing protective frameworks requires resources.
"It's a big deal, and it is going to cost money," he acknowledged, but the alternative - a system failing its most vulnerable at their time of greatest need - would prove far costlier for society.
UNSW Business School's Innovations in Risk, Insurance and Superannuation (IRIS) Knowledge Hub actively partners with industry to help research issues, provide insights and develop solution-focused recommendations to the challenges facing the risk, insurance and superannuation industries.
