Massive superannuation changes coming for millions of Aussies

Treasurer Jim Chalmers has announced major reforms to the way retirees will be able to use their pensions, as more than 2.5 million Australians will retire over the next decade.

Regulatory changes will allow super funds to offer more ‘innovative products’, such as payments distributed in installments rather than an upfront lump sum and money-back guarantees, with reforms due to start from mid-2026.

“We are improving innovative income stream rules and supporting more innovation in superannuation products,” the treasurer will say in a pre-recorded speech to be delivered at the Association of Superannuation Funds of Australia conference on Wednesday.

‘This will give members more options to suit their needs and help them get the most out of their super.’

In addition, the reforms will also create a ‘best practice and voluntary principles’ to help design future plans, and create a new reporting framework starting from 2027.

Dr. Chalmers will say the reforms would be “practical, pragmatic and sensible”, adding that they were necessary given Australia’s aging population.

The number of Australians over 65 is expected to double and the number of Australians over 85 to triple over the next forty years.

“The pension system is reaching a crucial moment,” he will say.

‘Within the next decade, more than 2.5 million Australians are expected to retire… Over the next four decades, supersector withdrawals are estimated to increase from 2.4 percent of GDP to 5.6 percent of GDP.

‘As our economy changes, the population ages and the super system evolves, more Australians will rely on bigger savings pots, 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 are required to pay 11.5 percent pension to employers, and that rate will increase to 12 percent on July 1, 2025.

While the Coalition has tried to push through reforms such as allowing future homeowners to access housing pensions, Mr Chalmers will insist that future policy must ’emphasize conservation’.

The government is also trying to reach pension balances above $3 million with an additional 15 percent on earnings, bringing the total percentage to 30 percent.

According to Treasury estimates, there will be around 80,000 people with pensions of more than $3 million by July 2025, but this number is likely to increase due to inflation.