16 February 2026
Australian retirees are missing out on billions 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.
“Australian retirees could be eligible for billions of dollars in additional retirement savings by simply moving their super to a tax-free retirement product,” Ms Blakey said.
“We're calling for changes that would allow super funds to actively help eligible members transition to retirement products. This simple change could make a profound difference to Australians' retirement outcomes.
“This isn't just about individual retirees - it's about Australia's future. By enabling retirees to maximise their retirement income, we’re supporting we're supporting more dignified retirements and helping to boost the 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 proposal would maintain clear member opt-out options.
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 'silver economy' represents a significant economic opportunity for Australia. By enabling retirees to maximise their retirement income, we are not just supporting more dignified retirements, we are enabling active participation in the economy through increased spending power," Ms Blakey added.
“If we don’t act, by 2030 we could be talking about a missed opportunity worth up to $5 billion a year for Australian retirees and the economy.”
The modelling also found:
- Only 45 per cent of eligible Australians with super accounts transition voluntarily to a tax-free retirement account at Preservation Age.
- Australians aged over 65 missed out on $13.5 billion in retirement savings between2017 and 2025.
HESTA's 2026-27 Pre-Budget Submission outlines additional priorities to modernise the retirement system, including:
- Allowing members to top up their retirement income streams with employment income.
- Removing barriers for pensioners to work more while keeping more of what they earn.
- Introducing measures to make the system fairer for women and carers.
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.
About HESTA
HESTA is one of the largest superannuation funds dedicated to Australia’s health and community services sector. An industry fund that's run only to benefit members, HESTA now has more than one million members (around 80% of whom are women) and currently manages approximately $101 billion* in assets invested around the world.
*Information is current as at the date of issue.
