From DBFO to CSLR – a litany of ineptitude

Mike Taylor

Managing Editor and Publisher

20 July 2026

OPINION

Most Australians do not need a superannuation balance of over $1 million to retire reasonably comfortably – they just don’t know it.

And the reason they still don’t know it is the policy ineptitude of successive Federal Governments. The pursuit of policy whack-a-mole.

For more than two decades the necessity for a $1 million superannuation balance was the mantra pushed by superannuation funds and one which took hold in Australians’ psyches.

Latterly, that $1 million figure has been dumped for the vastly more realistic figure of around $630,000 plus access to a partial age pension.

Notwithstanding this, for most of the past decade and half, successive Governments have worried about Australian retirees not drawing down sufficiently on their superannuation because they are concerned it will run out. The Governments have worried because of the impact on the age pension.

Usually, such worries reflect misinformation or a lack of information. Not unusually, people are dying with healthy superannuation balances.

Thus, when former Prime Minister and Treasurer, Paul Keating, last week canvassed closer links between the Centrelink pension regime and superannuation funds he was seeking to come up with a mechanism capable of giving retirees the confidence to appropriately draw down their super and therefore keep pressure of the age pension.

He was seeking to fit the imposition of the Retirement Income Covenant on superannuation funds with the realities of the Australian pension regime. It is an approach ambitious in concept but difficult to realistically achieve in the absence of an unwieldy and costly bureaucratic overlay.

As most financial advisers know, the confidence to suitably draw down on your superannuation balance mostly comes from the reassurance provided by accurate information.

However, those same advisers also know that a significant proportion of the people who need that information cannot afford to retain the services of a financial adviser and therefore need to rely on other sources. The most willing of those sources is likely to be their superannuation fund.

The former Coalition Government’s Affordable Advice Review pointed to superannuation funds being the most effective delivery conduit and this was reinforced by the Albanese Government’s first term efforts around the Delivering Better Financial Outcomes (DBFO) regime.

The problem, however, is that the DBFO regime implementation has been stalled by the Government’s focus on the collapse of the Shield and First Guardian funds and its realisation that there are fundamental flaws and gaps in Australia’s financial advice regulatory regime.

Right now, and despite the strong lobbying of industry superannuation funds, the DBFO implementation remains stalled. Also, right now, the Government has yet to deliver any of the legislative or regulatory frameworks which might actually serve to make the delivery of financial advice broader and more affordable.

The bottom line is that the collapse of Shield and First Guardian has represented an inordinate obstacle to necessary policy progress.

As things currently stand, with the DBFO stalled, the cost of the Compensation Scheme of Last Resort (CSLR) blowing out and amid continuing uncertainty around platforms and superannuation the outlook remains both confused and confusing.