Welcome to the third edition of The Retirement Rubicon.
In this edition we focus on the just-released joint APRA-ASIC Industry update - 2025 Pulse Check on retirement income covenant implementation, which provides the clearest picture yet of how super funds are operationalising the RIC three years on.
With the report forecasting that two in five RSEs will have a majority of their members in or entering retirement by 2045, pressure on RIC implementation is ratcheting up.
APRA-ASIC Triennial RIC Review
The review draws on responses from 39 RSEs, representing around 95% of the ~$550 billion in retirement phase assets within the APRA-regulated sector.
Trustees were asked about actions and improvements undertaken since the release of the 2024 Pulse Check report, which had noted “considerable variability in the implementation approach taken by RSE licensees, and a lack of urgency in embracing the intent of the covenant.”
Some of the findings in this 2025 Pulse Check report include:
Member understanding is improving but still shallow
Most RSEs report progress on understanding member needs, driven by improving data capabilities and efforts to close gaps noted in the 2023 thematic review and the 2024 Pulse Check.
97% of responding RSE licensees reported improvements in steps taken to understand member needs.
Yet only 15% rated their understanding of members as better than “good”.
The most frequently cited data sources to understand member needs include:
Direct member interaction during retirement-focused events such as webinars and seminars.
Annual surveys that capture financial profile information.
External research into members’ objectives, aspirations and concerns in retirement.
Cohorting is now widespread but still basic
Around three-quarters of respondents (77%) now segment members into cohorts, typically three or more. The most common factors are age and account balance, with some funds including employment status, life stage, inferred Age Pension eligibility and engagement/preparedness for transition to retirement.
Just over half (54%) have reviewed and updated their cohort frameworks since the 2024 Pulse Check. However, the report notes that many cohort approaches remain coarse and not yet fully connected to tailored retirement strategies or tools.
Member support is expanding but not yet targeted enough
The 2024 Pulse Check highlighted expanding member support as a top priority. This year:
92% of responding RSE licensees say they have delivered on intended member support enhancements since then.
However, only 28% have delivered cohort-specific enhancements to member support.
Only 36% have delivered improvements specifically targeted at retired members.
Better practice examples highlighted in the report include “nudges”, “next best actions” and referrals to third-party specialists (Age Pension, aged care, estate planning) however these are far from universal.
The regulators’ tone is hardening
The media release accompanying the report points to growing impatience by the regulators, noting that:
“While some trustees have shown leadership by investing significant effort to meet the needs of their members transitioning to and in retirement… far too many have been content with making only incremental improvements.”
Further, ASIC Commissioner Simone Constant is quoted as saying:
“Super trustees have had three years to develop meaningful retirement income strategies that meet the diverse needs of their members - and meet the law.”
It would be prudent to assume that addendum is no accident. The 2021 Design & Distribution Obligations (DDO) regime rollout serves as a precedent: a period of initial regulator engagement, followed by enforcement once expectations were made clear.
Lumisara’s take on RIC ‘readiness’
The 2025 Pulse Check offers a useful ‘temperature check’ on how RSEs are operationalising the RIC three years on from commencement. On balance, funds are moving in the right direction.
That said, trustees are finding certain aspects of implementation challenging, as detailed in Table 3 of the report, which we expand on below.
Gaining an adequate understanding of (often diverse) membership bases can be difficult, especially for factors not traditionally the domain of RSE data collection (particularly home ownership/debt and non-super assets).
Cohorting is proving similarly problematic, however the report acknowledges that member profiling can play a part in targeted communications and support.
As for member guidance and support leading up to and throughout retirement, the report suggests better practice involving ‘nudges’, ‘next best actions’ and referrals to third parties for specialised services (Age Pension access, aged care and estate planning).
Below, we summarise key challenge areas from Table 3 and offer our view:
Member Data
What Trustees are reporting
Inadequate data (partner status, home ownership, external assets/income), making it hard to segment, form a holistic view or personalise income solutions.
Lumisara View: RSEs should augment internal data with external sources (ABS Survey of Income & Housing; HILDA) to validate household profiles at a cohort level.
Use of predictive analytics to infer cohort household balance sheet (and social security) dynamics.
Advice & Engagement
What Trustees are reporting
Uncertainty around advice-related regulatory reforms, combined with low member engagement and financial literacy make communicating with and educating relevant members difficult.
Lumisara View: The sooner the remainder of DBFO is legislated, the better. That said, there is now enough insight into Treasury thinking in their ‘Advice through Superannuation’ draft package to move ahead with some measure of confidence.
Cohort & Product
What Trustees are reporting
Difficulty in defining/segmenting cohorts for tailored drawdown strategies. Market immaturity for longevity products.
Lumisara View: As an adjunct or supplement to cohorts, RSE licensees might consider member journey mapping to create “people like me” personas for use in comms or retirement education campaigns.
As to longevity products, more granular member data (per above) should allow better validation of ‘product-market fit’ vis-à-vis member demographics, product development costs, potential take-up and cross-subsidisation effects.
Privacy & Regulation
What Trustees are reporting
Privacy concerns around member data use and uncertainty related to regulator expectations.
Lumisara View: Strong data governance and supplier/vendor vetting per CPS 230 should be a core RSE objective.
The regulatory landscape will continue to be fluid due to DBFO and the 2027 commencement of the Retirement Reporting Framework.
Metrics
What Trustees are reporting
Difficulty agreeing on, and tracking, meaningful success metrics for retirement outcomes.
Lumisara View: Key pre-retiree and in-retirement metrics should be in place and regularly reviewed as part of SPS 515 and Business Performance Reviews (BPR).
Outcome-focused measures matter, e.g. retirement readiness indices or matrices. ‘What gets measured gets managed’, thus the metrics need to be well calibrated and fit-for-purpose.
Overall then, RSE licensees should use the 2025 RIC Pulse Check report as a yardstick to assess their progress, relative both to past activities and relevant peer funds.
With this review now concluded, fund executives should be looking to get on the front foot in addressing any problem areas and strengthening their fund’s retirement proposition for members.
Trustees who move early can treat the retirement income covenant not as a compliance hurdle but as a design aid - to build richer member insights, interactive tools and journeys that help members make better decisions, before and throughout retirement. That in turn should lead to better member experience and, by extension, retirement outcomes.
🧩 What’s New in Product?
TelstraSuper has announced its RetireAccess Lifetime Pension product will no longer be part of its product suite. New applications for this product are now closed, and existing members will be transferred to an equivalent Challenger product in early 2026.
The decision was made as part of the successor fund transfer program arising from merger plans with Aware Super. Details of the product closure as released by TelstraSuper are as follows: https://www.telstrasuper.com.au/learn-and-support/news-and-articles/Lifetime-Pensions-Changes
And that’s a wrap for this edition! As always, we welcome your questions or feedback - simply reply to this email.
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Thank you!
— The Lumisara Team