Ahead of the 2023-24 Federal Budget, a consultation paper released by the treasury has become a trending debate about the purpose, role, and access to superannuation. Keep reading this blog to know more about superannuation:

What is the Objective of Superannuation?

Basically, the objective of superannuation is to preserve savings to make it easy to deliver income for retirement along with government support in a sustainable manner. But what superannuation is not? If the purpose of superannuation is to preserve savings which means limiting access to superannuation savings to retirement solely, then it doesn’t mean accumulating wealth in a low-tax environment. The definition also prevents initiatives such as the Covid-19 scheme used during the epidemic to give access to quick cash to those in financial distress. And, it is not a way to buy a home.

According to the treasurer, in Australia, the average super balance is $150,000 – considering all those with a super balance, including those who are new entrants into the workforce. For people aged 65 and over, $400,000 is the average balance across all income brackets.

Superannuation and National Building

Nation-building is the second aspect of treasury consultation. According to the treasurer, defining the tasks of the super is not the mean of narrowing the role of the super in the economy but it is to broaden it.

In 1992, the compulsory superannuation guarantee (SG) was introduced at a rate of 3% and it will increase to 12% from 1 July 2025. The superannuation pool of Australia has grown from approximately $148 billion in 1992 to above $3.3 trillion. Now, it shows 139.6% of gross domestic product (GDP) and is estimated to grow to approximately 244% of GDP by June 30, 2061.

From 2025-26, Future Earnings for Super Balance Over $3m will be taxed at 30%

The government has announced that from 2025-26, future earnings for a super balance above $3m will be taxed at 30%. The concessional tax rate on earnings from superannuation will remain at 15% up to $3m. Around 80,000 people may be impacted by the measure. However, this declaration doesn’t make any changes to the transfer balance cap or the amount that one can have in the tax-free retirement phase.

Super Balance will Increase on 1 July 2023 but Doesn’t Propose Any Changes for Contributions

The general transfer balance cap (TBC) – the money you can carry in a tax-free retirement account will increase on 1 July 2023 by $200,000 to $1.9m. If your transfer balance account reached $1.7 million or above before 1 July 2023, then after 1 July 2023, your TBC would remain at $1.7m. If the highest value was between $1 and $1.7m, your TBC is proportionally indexed depending on the highest-ever amount your transfer balance account had.

For example, if you began a retirement income stream worth $1,275,000 on 1 October 2022 and this was the highest value your account had before 1 July 2023, then your unused cap is $425,000 ($1.7m-$1.275m). This unused cap percentage ($425k/$1.7m=25%) is calculated using the amount of unused cap. To create your new TBC of $1,750,000, the unused cap percentage is applied to the indexation increase ($200k*25%=$50k).

However, caps on the contributions you may make into super will not change. It means, for concessional contributions, it will be $27,500 and for non-concessional contributions, it will be $110,00. The contribution caps are usually linked to December’s average weekly ordinary time earnings (AWOTE) figures.


The blog shares information on the purpose of and access to superannuation. To get more information, you can get in touch with Reliable Melbourne Accountants.

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