Superannuation changes are just around the corner, and what you do now could make a meaningful difference to your retirement. This article walks you through the key updates to super for 2025/26 and how they may impact your strategy. Plus, we share practical steps you might want to take before 30 June to get ahead.
If you’d rather watch than read, this video also covers the topic:
Super guarantee (SG) is increasing
On 1 July 2025, the Superannuation Guarantee (SG) – the minimum contribution your employer must make into your super fund – increased from 11.5% to 12% of your base earnings (or ordinary time earnings).
What this super change means for you
You’ll notice a small boost to your super contributions. For example, if you earn $80,000 a year, that’ll be an extra $400 going into your super annually. Even small increases like these can snowball into something much bigger by the time you retire, thanks to the power of compounding interest. However, keep in mind that the concessional (before-tax) contributions cap will remain at $30,000. So, if you’re making extra personal contributions or you have a salary-sacrifice arrangement with your employer, you could find yourself over the cap. And if that happens, any excess contribution amounts will be added to your assessable income and taxed!
What you should do
Keep track of all contributions you and your employer(s) are making into your super fund(s). If you’re sitting close to the cap, consider adjusting these arrangements to keep you under. If eligible, consider “carrying forward” unused concessional cap amounts from previous years to increase your contribution cap.
You could lose carried forward concessional contributions
Have any unused concessional cap space? If so, now’s a good time to check in (especially before some opportunities slip away at the end of the financial year.)
A quick refresher: carried forward concessional contributions
Concessional contributions refer to pre-tax contributions made into your super. They include:
- superannuation guarantee contributions (paid by your employer),
- salary sacrifice contributions, and
- personal contributions that you claim as a tax deduction.
Also worth knowing:
- The concessional contributions cap is the annual limit on how much you can contribute at the concessional (pre-tax) rate. Currently, the cap is $30,000.
- If you make concessional contributions over this cap, the excess amount will be taxed at your marginal income rate (less a 15% tax offset for contribution tax already paid by your super fund).
- Carried forward concessional contributions, or ‘catch up contributions’, allow you to carry forward any unused concessional contribution cap amounts from previous years to increase your contributions cap in later years. To be eligible, you must have:
- a total super balance of less than $500,000 on the most recent 30 June; and
- unused concessional contributions cap amounts from one or more of the past five years.
Example: Is Sandy eligible to carry forward concessional contributions? Sandy had $400,000 in her super account as at 30 June 2025. Let’s say today is 20 March 2026 and her super balance has grown to $510,000. Even though Sandy’s super balance is currently above the $500,000 threshold, she is eligible to “carry forward” unused contribution cap amounts for the 2025/26 financial year, because her balance amount was under $500,000 on the most recent 30 June (being 30 June 2025). So, if she has $40,000 in unused cap amounts from the past five years, she could contribute up to $40,000 plus the current $30,000 cap – meaning up to $70,000 in concessional contributions in 2025-26.
What this means for you
If you’ve had years where you didn’t use up your concessional contributions cap, you might have built up some extra contribution room without even realising it. This can be a great opportunity to boost your super and save on tax. However, unused cap amounts expire after five years. That means any unused amounts from the 2020-21 financial year will disappear if you don’t use them by 30 June 2026. On top of that, your eligibility to carry forward unused cap amounts depends on your total super balance. If your balance is $500,000 or more on 30 June 2026, you won’t be able to access this ‘catch up’ measure in the 2026/27 financial year.
What you should do
Consider making extra concessional contributions into your super (if eligible) before 30 June 2026 to use up any available carried forward amounts. Note: Make sure to notify your super fund using the approved form if you plan to make personal concessional contributions. You’ll also need to receive an acknowledgement from the fund – otherwise, you could miss out on the deduction. Also, review your total super balance. If your balance is getting close to the $500,000 mark, it might be beneficial to find ways to keep your balance under this threshold before 30 June 2026. That way, you won’t unintentionally lose access to this strategy in 2026-27.
The transfer balance cap (TBC) will be increasing
On 1 July 2025, the Transfer Balance Cap (TBC) increased from $1.9 million to $2 million, giving you a little more room to enjoy tax-free earnings in retirement.
A quick refresher: the transfer balance cap (TBC)
The transfer balance cap (TBC) is the maximum amount of money you can move into the tax-exempt retirement phase of superannuation (e.g. by starting an income stream, like an account-based pension). Note: the TBC does not apply to Transition to Retirement (TTR) pensions unless they’re in retirement phase (e.g. if you are over age 65).
- The TBC is indexed periodically in $100,000 increments, based on inflation.
- Any super amounts over your personal cap must stay in your accumulation account, where earnings continue to be taxed at 15%.
Interested in learning more about how tax applies in retirement? Read our article: Taxes in Retirement: 7 Types & Smart Strategies to Reduce Them.
What this means for you
From 1 July 2025, can transfer more of your super into the tax-exempt retirement phase of superannuation – but only if you started your pension after the 1 July indexation (increase.) If, instead, you started your pension before 1 July 2025, you are locked in at the lower $1.9 million cap and only eligible for a proportional increase of the cap.
The total super balance (TSB) threshold increased
On 1 July 2025, the total super balance (TSB) threshold increased from $1.9 million to $2 million. So, if you’ve been hovering just above the $1.9 million limit and missing out on certain superannuation opportunities, this is welcome news!
A quick refresher: the total super balance (TSB) threshold
Your Total Super Balance (TSB) is the combined value of all your super accounts, including accumulation and retirement interests, plus rollover amounts, and adjusted for certain factors like personal injury payments. Also worth knowing:
- You can check your TSB by logging into ATO online services via myGov.
- Your TSB is used to determine your eligibility for a range of superannuation concessions, such as:
- Non-concessional (after-tax) contributions
- The bring-forward rule
- Government co-contributions
- The spouse tax offset
- If your TSB is over the threshold on 30 June of the previous financial year, you won’t be eligible for these strategies in the next financial year.
What this change means for you
The increase in the TSB threshold means that, if you’ve previously been just over the limit, you may now qualify for superannuation concessions! For instance, if your TSB is $1.95 million on 30 June 2025, you would’ve been over the threshold for 2024-25 but under the new $2 million limit for 2025-26.
Your minimum pension drawdown could be increasing
For anyone approaching (or already over) age 65, here’s a gentle reminder: your minimum pension payments could change from 1 July 2026.
A quick refresher: the minimum pension drawdown
The minimum pension drawdown is the minimum amount of money that you must withdraw from your super annually if you’re receiving payments from your pension account (such as an account-based pension or transition to retirement (TTR) pension.) Also worth knowing:
- The minimum drawdown rate (%) is based on your age, and the minimum drawdown amount ($) can be calculated by using the minimum drawdown rate against your pension account balance (table 1).
- From age 65 onwards, your minimum pension drawdown rate increases as you hit certain age milestones.
| Age on 1 July 2026 | Minimum drawdown rate |
| Under 65 | 4% |
| 65-74 | 5% |
| 75-79 | 6% |
| 80-84 | 7% |
| 85-89 | 8% |
| 90-94 | 11% |
| 95+ | 14% |
Table 1: minimum pension drawdown rates for 2026/27 Note: the information in this table is indicative only and does not consider pro-rating, rounding and other rules.
What this change means for you
If you’re turning 65 (or another age that bumps you into a new pension drawdown rate) on or before 1 July 2026, you’ll move into a higher minimum drawdown bracket from 1 July 2026. You’ll then need to adjust your pension withdrawal to meet the minimum requirement. Making the minimum pension withdrawal is important. If you don’t, your super income stream will stop for income tax purposes. In other words, your pension could lose its tax-free retirement phase status.
What you should do
Check your minimum pension drawdown rate for 2026/27 and calculate your required annual withdrawal amount. If it’s increasing, it could be a good time to check whether your cash flow strategy and broader retirement plan still align with your goals. For example, if you’re not planning to spend that extra amount, is it really worth leaving that surplus in a bank account earning minimal interest? Instead, it might make more sense to reinvest the surplus into something outside of super or perhaps it’s time to put it towards something that adds value to your lifestyle, like home comforts or funding a wellness activity.
The defined benefit pension cap is changing
On 1 July 2025, the defined benefit pension cap increased from $118,750 to $125,000 per year.
A quick refresher: the defined benefit pension cap
The defined benefit pension is an older type of income stream that pays a guaranteed income for life and is generally paid from a government super scheme or life insurance company. It’s more common among retired public sector workers. Also worth knowing:
- The defined benefit income cap is used to assess how much income can be received tax-free from these pensions.
- Excess amounts paid over this cap will attract additional income tax.
What this change means for you
A higher defined benefit pension cap means you’ll be able to receive more from your defined benefit income stream before any of it becomes taxable. This reduces the likelihood of facing unexpected tax bills or compliance headaches.
What to review before 1 July 2026 (recap)
As the financial year wraps up, it’s worth taking the time to review your super strategy, especially with the new updates to super rules. Remember: many of these changes won’t automatically benefit you – you’ll need to take proactive steps. Here’s a quick review checklist:
- Contributions: Make the most of your concessional contributions cap and consider making ‘catch up’ contributions (if eligible) before some of those unused caps disappear!
- Investments: Reassess your portfolio. Does the current mix of your investments still feel right for you and your retirement timeline?
- Pension payments: Ensure you’ve met your 2025/26 minimum pension drawdown and check your 2026/27 withdrawal requirement. Adjust if your minimum drawdown rate will be increasing.
Leaving your review to the last minute could leave you with one teeny, missed detail that could cost you far more than you’d expect. So, take the time now and stress less later. Super rules can be tricky, but with some well-informed planning, they can work to your advantage. By getting started now, you could boost your tax-free income, optimise contributions, and feel more in control of your retirement path. Unsure how the super changes affect you? We’re here to help. At Toro Wealth, we help Australians 50+ make the most of the latest changes and optimise their super strategy for ongoing retirement benefits. Click here to see how we can help and what it costs.
