Locked-In Retirement Account (LIRA): 2025 Guide for Australians

As Australia’s retirement system evolves, new structures and strategies continue to emerge. One concept gaining momentum in 2025 is the Locked-In Retirement Account (LIRA)—a vehicle that offers retirees both security and discipline for their superannuation savings. But what exactly is a LIRA, how does it differ from traditional superannuation accounts, and what changes have 2025 reforms brought?

What is a Locked-In Retirement Account (LIRA)?

Originally a Canadian concept, a Locked-In Retirement Account (LIRA) is designed to hold retirement savings that cannot be accessed until the account holder reaches a certain age or meets specific conditions. The idea is to preserve retirement savings by restricting early withdrawals, ensuring that funds are available when they’re truly needed.

While LIRAs are not officially legislated in Australia as of 2025, their principles are increasingly being reflected in local retirement account structures. In particular, the latest superannuation reforms have introduced features that mimic the “locked-in” nature of LIRAs to combat early access and leakage of retirement funds. For Australians, this means a growing focus on account types and strategies that keep retirement savings safe until preservation age.

2025 Policy Updates and How They Affect Retirement Savings

This year has brought significant policy shifts affecting retirement accounts:

• Superannuation Access Rules Tightened: The Federal Government, responding to rising early withdrawals during the COVID era, has further restricted conditions under which superannuation can be accessed before preservation age. Hardship and compassionate grounds now require stricter documentation.

• Retirement Income Covenant: The 2025 update to the Retirement Income Covenant requires super funds to provide more robust retirement income strategies, prioritising stable income and capital preservation—mirroring the locked-in philosophy.

• Emergence of LIRA-Like Products: Several major super funds now offer “locked-in” options, where members can voluntarily opt to restrict access to a portion of their super until a later date, in exchange for fee reductions or higher interest crediting rates.

These developments mean Australians need to carefully consider how and when they want access to their super. Locking in a portion could be a powerful way to ensure long-term security, but it comes with trade-offs in flexibility.

LIRA vs. Traditional Superannuation: Key Differences

Let’s break down how a LIRA-style account stacks up against traditional superannuation:

| **Feature** |**LIRA** |**Traditional Super** | |



| Access Before Preservation Age |Not allowed (except in rare cases) |Allowed under hardship/compassionate grounds | |

| Withdrawal Flexibility |Limited until retirement/trigger event |More flexible (within regulatory bounds) | |

| Investment Choices |Similar to super—varies by provider |Wide range of investment options | |

| Purpose |Preserve funds for retirement income |Accumulate and draw down as needed | |

For Australians worried about outliving their savings, a LIRA-style approach may be attractive. It guarantees a pool of funds that can’t be touched until retirement, reducing the risk of running out of money too soon.

Who Should Consider a LIRA-Style Account?

LIRA-style accounts are not for everyone. Here’s who might benefit the most:

• Disciplined Savers: Those who want to safeguard a portion of their super from temptation or emergencies.

• Pre-Retirees: Individuals entering their 50s and 60s who want to “lock in” a guaranteed income stream.

• High-Income Earners: Those who have maxed out concessional contributions and want to ensure longevity of their nest egg.

• Anyone Concerned About Longevity Risk: If you’re worried about outliving your savings, a locked-in structure adds an extra layer of protection.

Real-world example: Jane, 55, chooses to allocate $200,000 of her super to a locked-in account that can’t be accessed until she turns 65. This guarantees she’ll have a solid base for her retirement income, regardless of what happens in the next decade.

Risks and Considerations

Before opting in, it’s important to weigh the potential downsides:

• Lack of Flexibility: Once funds are locked in, you can’t access them for emergencies or opportunities.

• Changing Circumstances: Life can be unpredictable—illness, job loss, or family needs may arise.

• Market and Policy Shifts: The rules around retirement accounts can change. While current policy is supportive, future governments could adjust the landscape.

In 2025, some super funds offer partial lock-in options, allowing you to keep some savings flexible while securing the rest. This hybrid strategy may appeal to those wanting the best of both worlds.

The Future of LIRA in Australia

With Australia’s ageing population and increased focus on retirement adequacy, it’s likely that LIRA-style accounts will become more prevalent. The government’s Productivity Commission is already reviewing long-term retirement income streams, and several industry super funds have signalled further innovation in this space for late 2025 and beyond.

As these options expand, Australians will have more tools to tailor their retirement strategy—balancing flexibility, security, and peace of mind.