2 days Ago By Jessica Wang
Jim Chalmers has flagged sweeping reforms to how retirees will be able to use their superannuation, as more than 2.5 million Australians are set to retire in the next decade. Changes to regulations will allow super funds to offer more “innovative products,” such as payments distributed through instalments instead of an upfront lump sum and money back guarantees, with the reforms slated to kick in from mid-2026.
“We are improving the innovative income stream regulations and supporting more innovation in retirement products,” the Treasurer will say in a prerecorded speech set to be delivered at the Association of Superannuation Funds of Australia conference on Wednesday. “This will give members more options that meet their needs and help them make the most of their super.” Additionally the reforms will also create a “best practice and voluntary principles” to help the design of future plans, and create a new reporting framework set to commence from 2027.
Dr Chalmers will say the reforms would be “practical, pragmatic, and sensible,” adding that they were needed given Australia’s ageing population. The number of Australians aged more than 65 is set to double and the number of Australians aged over 85 slated to triple in the next four decades. “The superannuation system is reaching a pivotal moment,” he will say.
“Within the next decade, over 2.5 million Australians are expected to retire ..
. Over the next four decades, drawdowns from super are estimated to increase from 2.4 per cent of GDP to 5.
6 per cent of GDP. “As our economy changes, population ages and the super system evolves, more and more Australians will draw down on bigger pools of savings, that they will rely on for longer.” However he will add that more focus needs to be placed on the “retirement phase” in order to give retirees “peace of mind”.
Currently employers are required to pay 11.5 per cent superannuation to employers, with that rate to be increased to 12 per cent on July 1, 2025. While the Coalition has attempted to push reforms such as allowing prospective homeowners to access superannuation for housing, Mr Chalmers will enforce future policy should have an “emphasis on preservation”.
The government is also seeking to hit superannuation balances of more than $3m with an extra 15 per cent on earnings, bringing the total rate to 30 per cent. Treasury estimates have said that by July 2025 there will be about 80,000 individuals with more than $3m in superannuation, however this number is likely to increase due to inflation..
