Information gap leaves vulnerable retirees in dark, expert warns

Australia’s $4.3 trillion superannuation system is under the microscope as experts warn that poor information is leaving many retirees exposed to financial stress and inequity.

The concern follows a recent ASIC report found that none of 12 major superannuation trustees responsible for 9.3 million accounts and $1.14 trillion in assets had developed specific communications for vulnerable or culturally diverse members.

Associate Professor in the School of Risk and Actuarial Studies at UNSW, Katja Hanewald said that without timely and clear information, retirees might make poor drawdown or investment choices, miss insurance entitlements, or delay critical financial decisions.

“Prolonged uncertainty about retirement income can cause significant stress and reduce confidence in managing money later in life,” Hanewald said.

“Funds should also invest in staff training and ensure communication is accessible, culturally appropriate, and written in plain language.

“Over time, trustees need to build better data and feedback systems to understand member needs and evaluate whether their support and communication processes prove effective.”

UNSW Business School’s Fei Huang said uniform design perpetuates hidden cross-subsidies where “at risk” members effectively subsidise wealthier, healthier ones.

“Funds should not assume that members are homogenous – financially literate, healthy, and equally long-lived. Our research shows this assumption can produce structurally unfair outcomes,” she said.

“Over time, this undermines trust in the superannuation system, amplifies inequality, and weakens policy goals such as retirement adequacy and sustainability.

“Without fairness built into product design and communication, the retirement system itself becomes a driver of inequity rather than a remedy.”

Associate Professor in UNSW Law & Justice, Scott Donald said that the system routinely overlooks certain groups, including those with declining cognitive ability, workers in casual or cash-based employment, and residents of Indigenous or remote communities.

“The system is not designed in a way that supports them,” he said, citing barriers such as online-only services and default products that assume uniform needs.

Donald adds that advisory services should help members make critical decisions, such as establishing powers of attorney or planning insurance and estate matters, well before they face high-stakes choices.

“It’s a big deal, and it is going to cost money, but the alternative – a system failing its most vulnerable at their time of greatest need – will prove far costlier for society,” he said.

Regulators are also taking note as ASIC has identified slow and inconsistent death benefit claims handling as a persistent problem, while legislative reforms such as the Delivering Better Financial Outcomes framework remain delayed.