Super changes that kicked in from 1 July

Fun fact: Australia has the fourth highest level of retirement savings in the world, and we're on track to beat the Brits and Canadians by 2031 to take second place behind the US. It's a pretty impressive achievement when you consider the small size of our population.

Why do I mention this? Because the new financial year brings the inevitable round of changes to super.

Yes, it can be frustrating. Yes, it can mean your financial plans may need to be fine-tuned. But in the bigger scheme of things, continual tweaks around the edges have helped our super system become world-class.

This year, of course, some Australians would argue that we're seeing more than 'minor' changes. Let's take a look at six key changes that have kicked in - and a couple that are on the horizon.

1. The boss's contributions rose to 12%

Employer-paid super contributions have reached their peak, rising from 11.5% of ordinary time earnings to 12%.

It's the final increase we'll see in the Super Guarantee rate - and though small, the uptick can make a big difference over time.

Super industry body ASFA estimates the 0.5% increase in employer-paid contributions could add an extra $20,000 to the retirement savings of today's 30-year-olds over a lifetime earning the median wage.

But there's a twist. The higher super contributions could reduce your take-home pay. That's unlikely to happen if you're on an award or enterprise agreement. However, accounting body CPA Australia warns that if your employment contract includes a 'total remuneration package', you could pocket less take-home pay at the end of each month. If you're concerned, talk to your boss about what the change means for you.

If you're making salary sacrificed super contributions, check that the 0.5% rise in the boss's contributions won't push you over the $30,000 annual limit for deductible contributions. 

2. Super to be paid on government-funded paid parental leave

Great news for new parents, who can now expect to receive a super contribution at 12% of their government-funded Paid Parental Leave when they take time off to care for a baby.

It will be available if your child is born or adopted on or after 1 July 2025 and will be paid into your super fund as a lump sum, including interest, following the end of each financial year in which you received Paid Parental Leave.

This is a real step forward for women, who typically retire with 25% less super than men, often because of career breaks to raise a family.

It won't put extra cash in the hands of new parents today, but it will help women enjoy greater financial security in the future. And that's worth celebrating.

3. Changes to co-contribution income thresholds

It's easy to overlook the super co-contribution scheme, but it's one of those rare opportunities to score a financial boost from the federal government.

All you have to do is add to your super from take-home pay (a non-deductible contribution), and the government will chip in with a co-contribution of its own. What's not to love?

Earning limits apply, and the thresholds have increased from last financial year. In 2025-26, you'll need to earn $47,488 or less to get the maximum co-contribution of $500 if you contribute $1,000 of your own money.

You could still be eligible for a partial co-contribution even if you earn up to $62,488 this financial year.

4. A cut to the maximum super contribution base

The 2025-26 financial year sees the so-called 'maximum super contribution base' (MSCB) lowered to $62,500 per quarter, down from $65,070 in 2024-25.

It means employers aren't required to make Superannuation Guarantee contributions on earnings above this new limit. 

This is an important change for anyone earning over $250,000 annually. Even with the 12% rate on employer-paid super, the maximum quarterly super contribution your employer will need to make is $7,500 ($62,500 × 12%).

5. A rise in the total super balance threshold

Another change this financial year is the increase to the total super balance (TSB) threshold - that's the combined value of all your super accounts - which is going up from $1.9 million to $2 million.

Why does it matter? Your TSB is used to determine eligibility for a range of super concessions including:

• Non-concessional (after-tax) contributions
• Government co-contributions
• The spouse tax offset

If you're not sure of your TSB, check it out by logging into ATO online services via myGov.

6. An increase of the transfer balance cap 

Here's another classic piece of super jargon - the transfer balance cap (TBC). The TBC was introduced several years ago with the aim of limiting the amount of super people can put into tax-free retirement income streams.

Put simply, it's designed to stop the uber-rich getting a disproportionately high tax saving on their superannuation.

This financial year, the TBC increased from $1.9 million to $2 million. It means you can only transfer up to $2 million from your super into a retirement pension account. Any amount above the cap has to stay in the accumulation phase, with earnings taxed at 15% or withdrawn from super altogether.

Looking ahead

Proposed $3m super tax 

Okay, let's address the elephant in the room. The so-called Division 296 tax, which still needs to pass through Parliament, is set to apply an extra 15% tax on fund earnings above $3 million.

Yes, as it stands, unrealised gains could be taxed, which goes against the grain of our tax system.

And yes, it's unclear if the $3 million threshold will be indexed. If not, more Australians will be impacted by this higher tax over time (and ironically this year's 0.5% hike in super contributions could get more of us there sooner).

But it's important to put things in perspective. This proposed tax hike is expected to impact half a percent of Australians. These are people with at least $3 million in super. That's about 17 times the median super balance ($178,000) of today's 60-64-year olds.

The reality is that the overwhelming majority of us have a long way to go before Division 296 becomes a problem - if it ever does. In the meantime, I will be sticking to my strategy of aiming to grow my super as much as possible so that I can enjoy a decent retirement.

Payday super

Further down the track, we can look forward to 'payday super' being introduced from 1 July 2026.

It will mean employers are required to pay staff super contributions at the same time as their salary and wages. Brilliant move! The sooner we get super into our accounts, the sooner it can start earning compounding returns.

That lies ahead. For now, here's hoping you enjoy a super-prosperous financial New Year!