Time to read : 4 Minutes
A new financial year has so many of us talking about tax as well as indulging in EOFY sales, but it’s also a time when changes to super rules often come in. And this year is no exception.
Several important changes roll out from 1 July 2025 and there are others in the government’s pipeline. It’s a good idea to understand what they are and how they may affect you, that way you can plan and make the most of them. After all, the name of the game is to grow and preserve your retirement nest egg. So let’s jump in.
Last of the Super Guarantee increases
Since 2021, the rate of the Superannuation Guarantee (SG) – that is, your employer contributions to super – has been increasing on 1 July each year by 0.5 percentage points.
The last of these annual rises will come in from 1 July this year, taking the rate to 12%.
For a worker earning the Australian average income of $1,396 per week ($72,592 annually), this means an extra $363 going into their super in the new financial year compared with FY2024/25.
Over a 40-year working life, with average super returns of 7%, the change means an extra $5,435.63 by retirement (even before considering inflation and future income rises).
Be aware: while the SG is paid by your employer, if you are employed under a total remuneration package, your employer may absorb the increased super contributions from your gross pay. That means slightly less money in your take-home pay. This is something to discuss with your employer if you have any concerns or questions.
How can you make the most of the SG increase?
The main thing is not to let bigger employer contributions into your super breed complacency.
Look at how your superannuation is invested. With more money going in, can you afford to divert some into higher-risk assets to potentially reap greater returns? Is there scope to diversify your investment so that you can tap into new growth opportunities and better balance your level of risk?
Next, consider how you could grow your super even faster by leveraging tax-friendly rules of voluntary contributions. These include:
consolidating a foreign super fund or pension fund if you have worked overseas
downsizer contribution for over 55s selling the family home.
Ultimately, the more money going into your super, the faster it can grow and compound for your retirement.
Super on Paid Parental Leave
New parents will begin receiving superannuation contributions on government-funded Paid Parental Leave (PPL) payments. The initiative will apply to parents of children who are born or adopted from 1 July 2025 and who are eligible to receive government PPL.
It allows the super of new parents to continue growing, while caring for their new child. It will particularly benefit women, who typically have lower super balances due to time out of the workforce for child-rearing and gender pay gap.
Increased transfer balance cap
Retirees should be aware of an impending change to the transfer balance cap (TBC).
The TBC is the limit on how much can be transferred from a super accumulation account into a tax-free retirement phase pension account.
From 1 July 2025, this cap will increase by $100,000, taking it from $1.9 million to an even $2 million.
Potential future changes
With other changes to super in the news recently, you may be thinking they too are coming into effect this year. But these are only proposed at this stage and are yet to be made official. Here are a couple to look out for:
An increase in the concessional tax rate on future earnings from super balances over $3 million. Proposed to take effect from 1 July 2025, it’s likely to impact less than 1% of all super accounts. This measure would see the tax rate increase from 15% to 30%.
Increasing the frequency with which employers pay SG contributions. Labelled ‘payday superannuation’, employers would be required to pay super at the same time that wages are paid, rather than quarterly as they do now. By doing this, money can be invested sooner and compound those earnings faster. This would come in from 1 July 2026.
Bottom line
The various incoming and proposed changes to super rules may have a material difference on your life and livelihood, both now and in retirement.
With more contributions going into super accounts, and being paid more often, investment earnings can grow faster, and that means they can potentially deliver better outcomes for your golden years.
Meanwhile retirees will see changes on retirement income levels and even how much you choose to hold within your super versus other investment structures.
Given the complexities, it’s highly recommended that you seek professional advice from your financial adviser (and tax accountant where necessary). This can help you to get the most out of your retirement nest egg – both now and in future.
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Disclaimer
The information in this article is of a general nature only and does not constitute personal financial or product advice. Any opinions or views expressed are those of the authors and do not represent those of people, institutions or organisations the owner may be associated with in a professional or personal capacity unless explicitly stated. Helen Baker is an authorised representative of BPW Partners Pty Ltd AFSL 548754.
