11 February 2026
Australian retirees are missing out on billions of dollars in retirement benefits by not transitioning their superannuation to retirement phase, where they could benefit from tax-free investment earnings, new research reveals.
The research from Laneway Analytics, commissioned by HESTA, shows that in the 2025 financial year up to 1.8 million Australians collectively, and often unknowingly, missed out on an estimated $2.46 billion in additional investment earnings.
Without reform, this figure is projected to rise to more than $5 billion annually by 2030, impacting an estimated 2.9 million Australians.
In its 2026-27 Pre-Budget Submission, HESTA is calling for a range of regulatory changes to modernise the super system to ensure it better caters for the changing nature of retirement. This includes giving funds the ability to actively prompt members to transition to appropriate specific fund retirement products, with the ability to opt-out.
HESTA CEO Debby Blakey said the research clearly highlighted the value in reform.
“The new research shows Australian retirees are likely collectively missing out on billions in retirement savings by not transitioning their super to retirement phase, where they could benefit from tax-free investment earnings,” Ms Blakey said.
“We are calling for change that would allow funds to actively assist members to transition at the right time while maintaining clear opt-out options. It's about making the system work more efficiently to improve retirement outcomes.
“This reform has the potential to put billions of dollars into Australian retirees' pockets and help boost the local economy.”
The change advocated for by HESTA includes implementing 'soft defaults' that would automatically transition eligible members to retirement phase products at a certain age when they're no longer making contributions.
The research modelling[1] shows that transitioning to retirement phase products could boost a member's total retirement income by up to 12%, or as much as $99,000, compared to those who delay transitioning by four years.
The most profound benefit would be seen by members with lower balances, between $44,000 and $396,000, including women who may have worked part time or had breaks in their careers, who are often affected by the persistent gender super gap which has often been exacerbated by current super settings.
The benefits extend beyond individual retirees to the broader economy. As Australia's population ages, enabling retirees to maximise their retirement income could help fuel the growing 'silver economy' while reducing pressure on the Age Pension system.
"The research shows a clear opportunity to deliver better retirement outcomes through sensible policy reform. By modernising how super funds can support their members' transition to retirement, we could help unlock significant additional benefits for our members and have a positive impact on the broader economy,” Ms Blakey added.
“With the potential for retirees to miss out on over $5 billion in additional investment earnings annually by 2030, there's a clear case for implementing this change sooner rather than later.”
The modelling also found:
HESTA's 2026-27 Pre-Budget Submission outlines additional priorities to modernise the retirement system, including:
For several years HESTA has called for an update to the Low-Income Superannuation Tax Offset (LISTO) and last week welcomed the introduction to parliament of legislation that will increase the full LISTO payment from $500 to $810, and permanently pin LISTO eligibility to income tax thresholds. This pinning is critical to ensure those who LISTO is intended to support continue to receive this payment over the long-term.
More than 70,000 HESTA members are expected to directly benefit from the reform.
For more information about HESTA's 2026-27 Pre-Budget Submission and proposed reforms, visit the HESTA website.
Ends
[1] The Laneway Analytics modelling is based on assumptions including investment returns and the drawdown rate from income streams.