Treasurer Jim Chalmers has flagged sweeping reforms to how retirees will be able to use their superannuation, with more than 2.5 million Australians set to retire in the next decade.
Changes to regulations will allow super funds to offer more “innovative products” such as payments spread over installments rather than a lump sum up front and money-back guarantees, with the reforms set to come into force from mid of 2026.
“We are enhancing innovative income stream regulations and supporting greater innovation in superannuation products,” the Treasurer will say in a pre-recorded speech to be delivered at the Australian Superannuation Funds Association conference on Wednesday.
“This will give members more options to meet their needs and help them get the most out of their super.”
In addition, the reforms will also create “voluntary best practices and principles” to assist in the design of future plans and will create a new reporting framework starting in 2027.
Dr Chalmers will say the reforms would be “practical, pragmatic and sensible”, adding they were necessary given Australia’s aging population.
The number of Australians aged 65 and over will double and the number of Australians aged 85 and over will triple over the next four decades.
“The retirement system is reaching a crucial moment,” he will say.
Changes to regulations will allow super funds to offer more products such as installment payments
‘Within the next decade, more than 2.5 million Australians are expected to retire… Over the next four decades, super withdrawals are estimated to rise from 2.4 per cent of GDP to 5.6 percent of GDP.
“As our economy changes, the population ages and the super system evolves, more and more Australians will draw on larger savings reserves, which they will rely on for longer.”
However, he will add that more attention needs to be paid to the “retirement phase” to give retirees “peace of mind.”
Currently, employers must pay 11.5 percent of superannuation to employers, and that rate will increase to 12 percent on July 1, 2025.
While the Coalition has attempted to push through reforms such as allowing prospective homeowners to access housing superannuation, Chalmers will enforce a future policy that should have an “emphasis on preservation”.
The government is also trying to reach retirement balances of more than $3 million with an additional 15 percent on earnings, bringing the total rate to 30 percent.
Treasury estimates have said that by July 2025 there will be around 80,000 people with more than $3 million in retirement, however this figure is likely to rise due to inflation.