A strong return is not a retirement plan

Welcome to TRR #14 for 2026. This edition arrives as the superannuation sector closes out its fourth consecutive year of strong investment returns, even as the regulatory bar for retirement income strategies continues to rise sharply beneath trustees' feet.

We start with new Brighter Super and Investment Trends research showing that retirement confidence has recovered, while understanding and preparation remain uneven. We then look at Corrs’ review of public retirement income strategy summaries, which suggests many funds are still some distance from translating Treasury’s Best Practice Principles into visible member-facing design.

Finally, we turn to SuperRatings’ FY2026 return data. Plenty to explore across The Retirement Rubicon this fortnight so let's get into it.

The recently-released Brighter Super & Investment Trends 2025 Retirement Income Report, based on a survey of 3,679 Australians aged 40 and over (including 1,348 retirees), finds retirement readiness improving but still fragile. The fund's Ready for Retirement Index (RRI) rose to 60 points in 2025 from 57 the prior year, yet only 38% of those surveyed felt prepared for retirement, well below the 60% recorded in 2021.

The report's central finding is the value of acting early. Pre-retirees who feel prepared began planning for retirement 6.6 years prior to it on average, versus 3.8 years for those who feel unprepared. The former group hold average super balances of $438,000 against $177,000 for the latter.

Among retirees, those who began planning before age 40 are far more likely to report living comfortably (75%) than those who never planned at all (16%), lending credence to the maxim ‘a failure to plan is a plan to fail’.

The gap between expected income in retirement and perceived income required for a (self-assessed) comfortable retirement has narrowed to $1,000 per month, down from $1,300 in 2024, but knowledge remains a persistent constraint: only 29% of retirees report a clear understanding of their retirement income, and just 62% currently use any retirement income product, a somewhat worrying finding in light of the Retirement Income Covenant, the Best Practice Principles and the soon-to-commence Retirement Reporting Framework.

Of areas rated highly by retirees for support, personal financial advice was retirees' top request for the second consecutive year (21%), with assistance for aged care planning (16%) and products with better protection against market volatility (13%) also valued by retired members.

This report lands as a useful companion piece to ASIC's national readiness survey, which we covered back in May. The two findings, taken together, confirm the gap between pre-retirement confidence and financial capability.

ASIC's research exposed a confidence-literacy gap: 41% of pre-retirees felt confident managing their retirement finances, but only 26% demonstrated genuinely strong financial literacy.

Brighter Super's data adds the missing behavioural dimension; it shows what that gap costs in dollar terms. Members who start planning early don't just feel more confident, they hold balances roughly 2.5 times larger and report an income shortfall of under 1%, as against 47% for those who feel unprepared.

Where the two reports converge most usefully is on the role of the fund itself. ASIC's research argued that the confidence-knowledge gap was fundamentally a systems design problem, not a member failing. Brighter Super's own data reinforces that reading: 38% of retirees rated their fund's guidance in the top two tiers, yet only 9% of pre-retirees felt their fund's guidance was fully tailored to them.

The trustee lesson from both pieces of research is the same: personalised, early guidance is more than a member service nicety. Used well, it can close both the knowledge gap and the balance gap, before members reach the point where misplaced confidence and retirement reality converge with insufficient time to remediate the situation.

A new Corrs Chambers Westgarth review of 55 member-facing retirement income strategy (RIS) summaries has found genuine, but uneven, progress against the Best Practice Principles (BPP) released by Treasury in February. Nearly half of the summaries reviewed by Corrs also predate the 1 July 2025 commencement of revised APRA standard SPS 515 on member outcomes, and 18% had not been updated since 2022–2023.

The most significant public RIS gaps sit in the areas the BPP treat as central. Only 16 of 55 summaries showed development of at least three member cohorts reflecting the fund's own membership composition, despite APRA and ASIC's 2025 Pulse Check finding 77% of trustees claim to use cohorting.

Just 10 RIS summaries indicated the trustee provides access to a lifetime income product, and only one articulated a complete, cohort-calibrated retirement income solution incorporating both a lifetime income component and an above-minimum drawdown pathway. Fewer than one in four summaries addressed measuring strategy effectiveness, despite this being an explicit SPS 515 requirement.

On member outcomes, results were stronger: 82% of 28 published assessments demonstrated outcomes measurement for retired or approaching-retirement beneficiaries. Diversity and vulnerability considerations however remain almost entirely absent, with only one fund addressing members' circumstances of vulnerability directly.

We flagged our concerns with the voluntary, principles-based, approach of the Best Practice Principles in our February BPP special, and this new Corrs review backs that concern. At the time, we asked whether "principles without consequences have leverage." Treasury's own language was explicit: voluntary, non-binding, no enforcement action. Read in isolation, that framing invites scepticism as to whether trustees would seriously prioritise BPP implementation.

The Corrs data suggests that the answer, five months on, is: not yet, and not boldly enough.

The two gaps we flagged as having the most "operational bite" — the three-cohort minimum (Principle 4) and above-minimum drawdown pathways (Principle 6(iii)) — are precisely where Corrs found the weakest alignment. Only 16 summaries evidenced genuine cohort development, and just one connected cohorts, drawdown design and a lifetime income component into a single coherent, trustee-designed solution.

This matters because we argued the Principles' real force lies in setting a public benchmark rather than a penalty.

A fund still running a single undifferentiated cohort, or defaulting members to the legislated minimum drawdown rate, is now visibly behind a published standard. The Corrs review effectively operationalises that benchmark, converting our qualitative prediction into a sector-wide scorecard.

The disconnect between the 2025 Pulse Check's 77% self-reported cohorting rate and the Corrs review's 29% (16 of 55) demonstrated rate is the standout finding. It suggests many trustees are doing more internally than they are disclosing publicly to members.

Either that or they or conflating light-touch segmentation with genuine cohort-calibrated solution design. The Retirement Reporting Framework's 2027 commencement of data collection should help close that perception-action gap.

Superannuation funds delivered their fourth consecutive year of strong returns to 30 June 2026, with Lonsec/SuperRatings estimating the median Balanced accumulation option returned 9.1% for the year, recovering sharply from just 2.8% at the nine-month mark, after the US-Iran conflict weighed on markets in March.

International shares, led by AI infrastructure and hardware manufacturers, drove the rebound, while the S\&P/ASX 200 lagged with a 2.8% return against the S\&P 500's 20%-plus gain, an extension of the recent return drag from funds' traditional 'home bias'.

Across risk profiles, the median Growth accumulation option returned an estimated 10.6% for the year and the median Capital Stable accumulation option 5.9%. Over the medium and long term, the median Balanced accumulation option returned 6.6% p.a. over 5 years and 7.7% p.a. over 10 years.

SuperRatings notes that members who stayed invested through the Trump administration's tariff shocks of April-May 2025 and the more-recent Iran conflict, received an estimated 13.4% return in the median Balanced accumulation option between 1 January 2025 and 30 June 2026, reinforcing the cost of switching to cash during downturns.

Strong returns give funds more than a positive performance message. Annual performance reporting is one of the few moments when many members are already paying attention to their super, which makes it a valuable opening for better retirement communication.

The pension table in the release is a good example. The median Balanced pension option returned 10.2% over the year to 30 June 2026, compared with 9.1% for the median Balanced accumulation option. The same pattern appears over 5 and 10 years, and across the Capital Stable and Growth options.

That is not because pension portfolios are necessarily better. A large part of the difference is tax: earnings in the retirement pension phase are exempt from tax, so otherwise similar portfolios can report different headline returns once a member moves from accumulation to pension phase.

That distinction matters for members approaching retirement. A member comparing their own accumulation return with a pension-phase benchmark can easily misread performance, expectations, or retirement-income projections if the tax and phase difference is not explained.

For trustees, the opportunity is to use strong-return years to do more than report a number. Good communication explains what staying invested achieved, why returns can look different in accumulation and pension phase, and how recent performance should feed into retirement-income decisions around drawdowns, sequencing risk and guidance. A member can see a strong return and still not know what it means for retirement. That is the gap funds should be closing.