Australia’s superannuation system is too complex. This puzzle is too hard for retirees to solve alone. This report charts the path to a simpler super system that lets retirees stress less, spend more and enjoy their retirement years. It proposes seven recommendations and three key reforms for government to simplify super in retirement.

Key findings

• About 80% of Australians find retirement planning complicated and about 60% expect their retirement will be financially stressful.
• Few retirees draw down on their retirement savings as intended, and many are net savers.
• Australia’s multi-trillion-dollar compulsory superannuation system is turning into a massive inheritance scheme.
• The little guidance retirees do receive is unhelpful, steering them into account-based pensions, which require them to manage their spending to avoid the risk of outliving their savings.

Key reforms

1. The federal government should offer all Australians a lifetime annuity which would pay them a guaranteed income for life. Retirees should be encouraged to allocate 80% of their super balance above $250,000 to the government annuity. This reform could boost retirees’ incomes by up to 25%.
2. The government should create a top 10 list of the best super funds, and then steer retirees towards those funds. APRA (the Australian Prudential Regulation Authority) should be asked to assess and performance-test all account-based pensions. These reforms could boost the incomes of future retirees who continue to opt for an account-based pension by up to $70,000 over their retirement.
3. The government should establish a free, high-quality guidance service to help retirees (and people approaching retirement) to plan their retirement incomes. The service should also assist eligible retirees to apply for the Age Pension. This service would cost about $360 million over its first four years and should be funded by a levy on all super account balances.

The report is accompanied by a briefing pack and chart data.