Margaret Franklin, president and CEO at the CFA Institute, which collaborated on the report, said as debate grew around whether governments should direct pension investments toward national priorities, the responsibilities of those who design and manage pension funds took on even greater significance.

“Proposals in this space raise difficult questions about how to balance national interests with fiduciary duty and underscore how such shifts would require robust frameworks to protect retirement security,” Franklin said.

“The 2025 index makes one thing very clear: the core purpose of pensions is to secure retirement income for beneficiaries, guided by fiduciary duty above all else. Regulations and government actions, from tax policy to investment mandates, directly shape how funds allocate capital.”

She added that as more public systems turn to private markets for returns, investment professionals must be well-prepared to evaluate, integrate and respond as well as explain how policy decisions can impact long-term outcomes.

The report found that as global uncertainty rises alongside the increasing size of pension fund assets, some governments were encouraging more domestic investment by pension funds in areas of national priority for the longer-term benefit of society.

“Governments worldwide have long played a role in shaping how private pension funds invest, by imposing guidelines to protect retirees or encouraging the pension sector to support domestic economic goals,” the report read.

“Countries including the UK, Canada, Australia, and Malaysia have recently encouraged pension funds to support domestic infrastructure and innovation. Meanwhile, in other countries, debates continue around whether pension funds should be forced to consider environmental, social and governance factors instead of focusing solely on financial performance in investment decisions.”

Australia scored a B+ on the index this year, which indicated it is a system that has a sound structure, with many good features, but has some areas for improvement that differentiate it.

The report said that the overall index value for the Australian system could potentially be increased by firstly focusing on retirement income as the primary purpose of superannuation.

It also suggested moderating the assets test on the means-tested age pension to increase the net replacement rate for average-income earners and raising the level of household savings and reducing the level of household debt.

Furthermore, it recommended introducing a government superannuation contribution to primary carers of young children

The Australian index value increased slightly from 76.7 in 2024 to 77.6 in 2025, primarily due to an increase in the mandatory contributions set aside for future retirement benefits and updated economic growth data published by the IMF.

Nick Hamilton, chief executive of Challenger, said the focus of the Australian superannuation system remains on lump sum balances, with over half of retirees only drawing the minimum from their super.

“This behaviour is driven by Australian retirees' fear of running out of money and it means that Australian retirees are not enjoying the lifestyle that they can afford in retirement.”

“Super is for spending, not stockpiling. Unless we give retirees the confidence to turn their savings into a reliable income, too many Australians will continue to ‘under-retire’ and miss out on the lifestyle they’ve worked hard for."

Hamilton continued that retirees spend when they feel secure, which supports local businesses, creates jobs, and drives prosperity.

“Building a retirement income system that delivers confidence is not just the right thing for retirees. It’s a win for the entire economy.”

“Initiatives such as the Best Practice Principles for Retirement Income should help superannuation fund members achieve better outcomes, but the system as a whole hasn’t delivered yet on Retirement Income. Making sure that people are aware of their options in retirement and that they get the right advice, help or guidance at the appropriate time will lead to better outcomes for Australian retirees.”