Since July 2022, every APRA-regulated superannuation trustee has been required to formulate and implement a retirement income strategy under the Retirement Income Covenant (RIC). More than three years on, the regulators have delivered their verdict: it isn't working well enough.
In their 2025 Pulse Check, APRA and ASIC found only 15% of trustees rate their own understanding of their members as better than “good,” despite 97% reporting some improvement since 2024. Cohort-specific support for members who have already retired sits at just 36%. Only 13% of funds use cohort-specific communications to help members tailor their retirement approach. The regulators' conclusion was blunt: “far too many have been content with making incremental improvements.”
A separate ASIC review of 12 trustees, together responsible for 9.3 million member accounts and $1.14 trillion in assets, found a “one-size-fits-all” approach to communication was still the norm. None of the 12 had built specific retirement communications for vulnerable members. Only a third of pre-retirees say they feel confident about their financial position heading into retirement.
The RIC problem is really a data problem. Funds hold rich information on balances, contributions and account activity, but very little on how members actually live and spend once they retire. Without that, “genuinely improving retirement outcomes,” the RIC's core test, is difficult to demonstrate rather than simply assert.
Design and Distribution Obligations (DDO) raise the stakes further. In February 2026, the Federal Court ordered Australian Unity Funds Management to pay a $7.125 million penalty for failing to confirm that investors in one of its funds actually matched its target market, despite having a target market determination on paper. The court's finding was pointed: having a document isn't the same as understanding who you're serving. ASIC has signaled the same standard applies across financial products, including superannuation.
Together, RIC and DDO are pushing funds toward the same requirement: real, ongoing evidence of who their members are and what they need, not assumptions built on averages and defaults.
That's the gap Fonto is exploring how to help close, using independent insight into how members actually spend and manage money, so funds can move from compliance on paper to demonstrable member understanding.
We don't have a finished product to show you yet. We're in the early stages of shaping one, and we want to build it with the people who understand this problem best. If your fund is grappling with the RIC or DDO member-understanding gap, we'd like to hear how you're thinking about it.
Reach to the team using the contact form on this website for more information.
Our Sources:
- PRA/ASIC, Retirement Income Covenant Pulse Check 2025 (industry update)
- ASIC 25-235MR, “ASIC sends clear message to super trustees amid glaring retirement communications gaps,” 2025
- ASIC 26-011MR, “Federal Court orders Australian Unity Funds Management to pay $7 million penalty,” Feb 2026
- Clayton Utz, “$7.125m penalty for DDO breaches: takeaways for financial product issuers,” Feb 2026
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