If you’ve been following the news lately, you’ll know that superannuation is once again in the government’s crosshairs.
For many Australians—especially Baby Boomers who are either approaching retirement or already enjoying it—this is a source of real anxiety.
After all, your super is your nest egg, your safety net, and, for many, the key to a comfortable retirement. So, what’s really going on with these new superannuation changes, and should you be worried?
The $3 million super tax: What’s changing?
The government’s latest proposal is to tax superannuation balances above $3 million at 30 per cent—double the current rate.
This move has sparked heated debate, with critics arguing it unfairly targets those who have worked hard to build up their savings.
Assistant Treasurer Daniel Mulino, however, insists that such changes are necessary to keep the super system ‘in step with reality’.
‘It’s not surprising that a system as large and complex as super is occasionally examined, and occasionally there are policy tweaks,’ Dr Mulino told the Australian Financial Review.
‘Superannuation has achieved many very strong outcomes, but that isn’t to say it doesn’t need to be reformed occasionally.’
Treasurer Jim Chalmers echoed this sentiment, saying, ‘We’ve got a mandate for that change. We’re not looking for opportunities to go back on the things that we have got a mandate for. We’re looking for new ideas.’
Who will be affected?
According to the government, around 80,000 Australians will be directly impacted by the new tax. But here’s the catch: the $3 million threshold isn’t indexed to inflation.
That means, as the years go by and the value of money changes, more and more people could find themselves caught in the net.
While the government hasn’t ruled out indexing the benchmark in the future, for now, it remains fixed.
This has led to concerns that what seems like a ‘high roller’ tax today could become a mainstream issue in decades to come, especially as property and share values rise.
Market volatility: A rollercoaster for your super
If the tax changes weren’t enough to make you nervous, recent market volatility has added another layer of uncertainty. Global events—like Donald Trump’s tariff battles and unrest in the Middle East—have sent share markets on a wild ride.
The ASX 200, for example, dropped from a record high of 8,555 points in February to 7,343 in April, only to bounce back to a new high of 8,587 in June. The US markets have seen similar swings.
For retirees and those nearing retirement, these fluctuations can be nerve-wracking. According to research from AustralianSuper, 33 per cent of Baby Boomers are anxious about their retirement savings due to market volatility.
And it’s not just the older generation—22 per cent of 25 to 34-year-olds are also worried about their super.
Should you change your super strategy?
When markets are volatile, it’s tempting to want to ‘do something’. In fact, 40 per cent of people surveyed by AustralianSuper believe it’s better to switch their super to cash or lower-risk options during downturns, then reinvest when things recover.
But Alistair Barker, Head of Asset Allocation at AustralianSuper, warns that this approach can backfire.
‘Someone who switched to cash as the market dropped in early April this year would have missed out on the strong recovery in later April and May,’ he explains.
History shows that those who stay invested through the ups and downs tend to come out ahead in the long run.
This is a lesson many learned during the Global Financial Crisis and the COVID-19 pandemic: markets do recover, and superannuation is designed to weather these storms.
In fact, 45 per cent of people said they would keep their investments the same even if there was a significant market drop—a sign that more Australians are recognising the long-term nature of super.
What should you do now?
If you’re feeling uneasy about your super, you’re not alone. The best thing you can do is seek advice—either from your super fund or a qualified financial adviser.
Your investment strategy should reflect your personal circumstances, including your risk tolerance and how long you plan to keep your money invested.
Remember, superannuation is a long game. While it’s natural to feel anxious during periods of change and uncertainty, making knee-jerk decisions can do more harm than good.
Focus on your long-term goals, and don’t be afraid to ask for help if you need it.
Credit: James Wrigley / Instagram
Looking ahead: More changes on the horizon?
The government has made it clear that superannuation will continue to evolve. As Dr Mulino put it, ‘I don’t think it’s likely that superannuation is not going to be changed ever again. That’s not realistic.’
So, while the $3 million tax is the headline today, it’s wise to stay informed and be prepared for further tweaks down the track.
Your voice matters
How do you feel about the proposed superannuation changes? Are you worried about your retirement savings, or do you feel confident in your current strategy?
Have you ever changed your super investments in response to market volatility—and how did it work out for you?
We’d love to hear your thoughts and experiences. Share your story in the comments below and join the conversation with other YourLifeChoices members. Your insights could help others navigate these uncertain times!
Also read: One costly super misstep Australians keep making (and how to dodge it)
The main reason people are uneasy about the changes to Superannuation is headlines like this. People with more tham $3m in superannuation is as a tax dodge. As long as the $3m figure is indexed in the future then this is a reasonable change, after-all the 30% tax on earnings is still below a reasonable point.
And most of these sensational headlines are from news reports that back the LNP and are opposed to any taxes etc. on the wealthy.
When will you wake up? Super is not about saving to have a more comfortable retirement but for retirees not to get the Aged Pension!
About time these multi millionaires paid their fair share of tax instead of using loopholes in super to create wealth.
The proposed super changes won’t, repeat, won’t affect 99.5% of policy holders.
There were 91 Australians who earned more than $1 million in total income yet paid no tax in 2022-23, according to newly released data from the Australian Taxation Office (ATO).
This is related and apparently we need to increase defence spending.
Young ones being put in harm’s way by being in defence forces are the ones affected the most and are predominantly from poor or middle income homes.
The rich should pay more tax as they are the ones that benefit the most from defence whereas poor etc are already as low as they will probably go
Paul Valery said
“War: a massacre of people who don’t know each other for the profit of people who know each other but don’t massacre each other.”