Superannuation rules are constantly evolving, and 2025 brings several important changes that could affect your retirement savings. Whether you're just starting to build your super or already planning for retirement, understanding these updates will help you make informed decisions. Here's a straightforward look at what's coming.

Proposed Tax Changes for Large Super Balances

The government has proposed an additional 15% tax on earnings for super balances over $3 million, potentially starting from July 2025. While this passed the House of Representatives in 2023, it's facing challenges in the Senate, with concerns about taxing unrealised gains and the fixed $3 million threshold.

With a federal election approaching, this legislation remains uncertain. The Senate will revisit the proposal in February 2025, but if you have a large super balance or expect to reach $3 million in coming years, it's worth discussing potential strategies with a financial advisor.

Super Guarantee Increasing to 12%

From July 1, 2025, employer superannuation contributions will increase from 11.5% to 12% of your salary. For someone earning $90,000, this means an extra $450 per year going into super. Over 20 years, this small increase could add approximately $15,000-$20,000 to your retirement savings, depending on investment returns.

It's worth checking whether your employment contract is structured as "base plus super" or "inclusive of super." If it's inclusive, your take-home pay might decrease slightly as more goes to super.

Transfer Balance Cap Increasing to $2 Million

The Transfer Balance Cap – which limits how much you can move into tax-free retirement phase – will increase from $1.9 million to $2 million on July 1, 2025. This change primarily benefits those who haven't yet started a retirement pension, are approaching the current cap limit, or want to maximize tax-free pension income.

If you've already started a retirement pension, you may receive a proportional increase to your personal cap depending on your circumstances.

Changes to Total Superannuation Balance Thresholds

As the Transfer Balance Cap rises, so will the Total Superannuation Balance thresholds that determine your ability to make after-tax contributions. The expected new limits for 2025-26 are:

• Under $1.76m: Contribute up to $360,000 over 3 years

• $1.76m to under $1.88m: Contribute up to $240,000 over 2 years

• $1.88m to under $2m: Contribute up to $120,000 over 1 year

• $2m or more: No non-concessional contributions permitted

This creates an opportunity for those with balances under $1.76 million to make significant contributions before reaching higher thresholds.

New Flexibility for Legacy Pensions

December 2024 saw new rules introduced to give SMSF members with older "legacy pensions" more flexibility. If you have lifetime pensions, life expectancy pensions, or market-linked pensions in an SMSF, you now have a five-year window to review and potentially convert them to more flexible arrangements without the previous restrictions.

These legacy products have been difficult to change in the past, but the new rules offer more options. Since these decisions can be complex, speaking with a financial adviser who specializes in SMSFs is recommended before making any changes.

Improved Super Fund Performance and Transparency

Super funds are under increasing pressure to deliver better performance and transparency. In 2025, expect continued regulatory focus on underperforming funds, clearer reporting on fees and investment performance, and better comparison tools.

Take advantage of this improved transparency by reviewing your current fund's performance against others. The ATO's YourSuper comparison tool makes this process straightforward.

Digital Innovation in Super Management

Technology is playing a bigger role in superannuation, with better online tools, mobile apps, and artificial intelligence to help members track their savings and make smarter investment choices. Take advantage of these innovations by downloading your fund's mobile app, setting up regular balance notifications, and using projection tools to track progress toward your retirement goals.

Taking Action

Superannuation is a long-term investment, and small changes can have a big impact over time. With these changes on the horizon, consider:

• Reviewing your current super arrangements

• Checking if you can make additional contributions before rule changes

• Exploring whether your SMSF legacy pension could benefit from the new flexibility

• Speaking with a financial advisor about how these changes affect your specific situation

By staying informed and proactive, you can ensure your super continues to work effectively for your retirement.