Industry Super Australia has reported that only 5 per cent of those who are active members of Industry Super accumulation funds at 55 are members of income streams at 66. A surprising statistic, given the brand strength of profit-for-member funds. Industry blog Trialogue recently noted that while member retention at retirement in profit-for-member funds has improved, it is still far lower than for retail funds.

With about 700 Australians reaching retirement age daily, the boomers are a large and important segment of the market. Many Australians in retirement or transitioning into retirement feel anxious when making financial decisions and it is difficult for them to find help.

The right course of action depends on their circumstances and desired retirement lifestyle. Many of those approaching retirement with substantial savings will access tailored financial advice. Most retirees, however, find this expensive, intimidating and unnecessarily complicated. Furthermore, tailored advice can be expensive for funds to deliver and difficult to scale.

Better decisions

Consequently, members left to their own devices are prone to making poor retirement decisions. Some will overspend early in retirement, endangering their standard of living in the longer term. Many others fear running out of money or becoming a burden on their families, so they become very nervous when their superannuation balance falls.

While there is a segment of boomers who will self-fund their retirement, the majority are everyday Australians who only dream of having $1.6 million transfer balance cap problems. It is this group that is in danger of being left behind. We spoke to them about what would help them make better decisions. Some of what they said we expected; they want unbiased, trustworthy advice that gives them options, and they are worried about security and the privacy of their information. Other responses were unexpected; we thought retirees would appreciate help in managing their expenses but they were much more interested in finding ways, to generate income and tracking the performance of their investments.

Our research revealed that their biggest pain point was accessing their age pension. Centrelink received 174,000 claims for the age pension last year, a number that is growing quickly. Having a reliable, regular source of income is reassuring; it is important to know that regular bills are covered.

The age pension is the foundation of retirement income for many, and a critical part of maintaining a certain standard of living.

‘A nightmare’

Yet the process of applying for this reassuring income was consistently described as “a nightmare” and “an alienating experience” not befitting people who’d worked for many years and paid their taxes. Retirees were overwhelmed by the complicated questions and the number of forms they were required to complete. There are long waiting times at Centrelink offices and it was necessary for many to return several times. Many tried to call Centrelink for help but couldn’t get through; 55 million calls to Centrelink received a busy signal in 2016-17. We heard stories from retirees who were so frustrated they simply gave up, even though they knew they were eligible for a payment and related benefits such as the pensioner concession card.

A problem so central to the wellbeing of pension phase members provides an opportunity for funds. Digital services that enable members to check their pension eligibility, prepare their pension application and guide them through Centrelink’s maze are now available. The extensive data gathered in the process has the potential to facilitate cost-effective, scaled retirement income advice for the member and possibly the member’s partner. These services can help funds engage and retain members in pension phase.

The purpose of super is to provide income in retirement to substitute for or supplement the age pension. A logical step for funds, then, is to help their members in pension phase access their Centrelink age pension entitlements.

Paul Rogan is founder and chief executive of Retirement Essentials.