Super Nation is a fortnightly column that examines, explains and analyses key issues in one of Australia's largest, fastest-growing and most important industries: superannuation.
As the year rolls to an end, it is timely to review 2025 for the key events in Australia’s superannuation sector.
Where do we start?
Tax backflip
An obvious place is the tax on high account balances, first proposed in 2023 and changed significantly in October after a major backlash.
Prime Minister Anthony Albanese decided the political impact of the controversial decision to tax unrealised capital gains was too much to endure, even for his Labor Government that had been returned to power in a landslide victory earlier in the year.
The change, which lifts the tax rate on earnings on balances above $3 million (US$1.98 million) from 15% to 30%, will apply only to realised earnings, and the thresholders will be indexed to inflation to limit the number of people caught in the net.
But, in an attempt to reduce the fiscal impact, which was estimated at $4.3 billion over the forward estimate period, the Government introduced a second large balance threshold with a 40% rate applied to earnings on balances over $10 million.
As we wrote in this column at the time, it was a backflip of which legendary gymnast Nadia Comaneci would have been proud because Treasurer Jim Chalmers had denied for more than two years that he would amend his plans for the new impost.
“The original model was the best option identified at the time, but we have taken the decision to adjust the model to recognise the views we have heard since then,” he said in a statement.
As the Treasury observed at the time, the changes will maintain the concessional treatment of super, which is taxed at 15% during the accumulation phase rather than higher marginal rates for most Australians, but make the concessions more sustainable.
Treasury is consulting with the super industry and other relevant stakeholders to “settlement implementation” of the Treasury Laws Amendment (Better Targeted Superannuation Concessions) Bill 2025, with the process scheduled to end on 16 January.
“The Government will introduce legislation to implement these changes as soon as possible in 2026,” Treasury said in a factsheet.
Sharing compo cost
Another controversial topic is funding of the compensation scheme for victims of financial misconduct, following revelations that the cost has blown out and left interested parties wondering who will fill the shortfall.
The Compensation Scheme of Last Resort (CSLR) estimated the levy would be A$137.5 million (US$89.4 million) for the 2027 financial year, 82% more than the revised FY2026 estimate and more than six times the $20 million cap for the financial advice sector.
This does not yet include the cost of compensating victims of the Shield and First Guardian master fund collapses, which have cost members about $1 billion.
Assistant Treasurer and Minister for Financial Services Daniel Molino subsequently announced that a special levy for the 2025/26 year would be applied “broadly” to reduce the burden on individual subsectors and ensure the sustainability of the CSLR.
The Financial Advice Association of Australia (FAAA) called on the Minister to reconsider this decision, given that the largest share of the levy would be paid by financial advisers who had nothing to do with the misconduct that gave rise to the need for compensation.
FAAA CEO Sarah Abood wanted the Government to spread the impact on the basis of capacity to pay, arguing the additional financial burden on the 6,000 mostly small and micro businesses in the advice sector was unsustainable.
“We call on the Minister to reconsider this unjust additional levy that threatens the very viability of our profession,” Abood said in a media release.
But the organisations representing the major super funds opposed suggestions that their members should help fund the scheme, with the Super Members Council (SMC) claiming it would “embed and escalate moral hazard”.
Association of Superannuation Funds of Australia (ASFA) said it was wrong in principle to use Australians’ retirement savings to fund compensation for losses in other sectors through the CSLR, because most super fund members cannot benefit from the scheme.
“It is like being forced to pay for home insurance not only for your own house, but also for someone else’s house in another town,” ASFA CEO Mary Delahunty said in a media release.
Payday super
Arguably less controversial was the new requirement for employers to pay super with wages and salaries from 1 July 2026 rather than with a delay of up to three months.
Rated the ‘number one’ development of 2025 after the passage of legislation in November, the SMC estimated the change could add an extra $7,700 to the average worker’s super, while ASFA said the reform would help address the unpaid super problem costing workers than $5 billion each year.
But the planned introduction of payday super was not all clear sailing with tax, super and financial advice bodies urging the Government to postpone the start for up to two years to give the industry and small businesses time to prepare, as we explained in this column.
A low bar
SMC’s second-ranked development was the Government’s announcement it would lift the Low Income Superannuation Tax Offset (LISTO) to boost the super of about 1.3 million low-paid workers – many of them women – by up to $60,000.
The LISTO, a government payment which offsets taxes paid on super contributions by low-income earners, will increase from a maximum of $500 to $810 per year, and the income threshold will rise from $37,000 to $45,000 a year from 1 July 2027.
“That’s not just a boost; it’s a lifeline for those who need it most,” SMC said in a media release.
We covered much more in 2025, but that rounds out some of the key events of the year.
