Check out the policy changes impacting SMSFs in 2025

Managing a self-managed super fund (SMSF) requires trustees to keep abreast of changing superannuation rules as well as compliance and regulatory changes.

Several changes to superannuation will take effect from 1 July 2025, which will also affect many SMSFs. Let's run through them.

Changes to superannuation in 2025

Super guarantee

From 1 July 2025, the percentage of your wage that an employer is required to pay into your super account will increase from 11.5% to 12%.

Super on government-funded paid parental leave

Superannuation payments will be paid to those on government-funded Paid Parental Leave (PPL) from 1 July 2025.

Proposed change to super tax concessions

From 1 July 2025, the federal government is proposing to apply a 30% concessional tax rate for future earnings on superannuation balances above $3 million. This will replace the old rate of 15% which will still apply to balances less than $3 million. (Note: as at April 2025, this measure has not yet been legislated.)

Transfer balance cap thresholds changing

The transfer balance cap effectively limits the amount of superannuation that can be used to start a pension where investment returns are generally tax free. From 1 July 2025, the transfer balance cap will increase from $1.9 million to $2 million.

See also: Guide to SMSF Accumulation Phase and SMSF Pension Phase

How will super contributions change?

The general transfer balance cap is used to determine eligibility for making certain contributions to your super, as well as receiving government contributions.

Before we get into the types of contributions, it's important to note that the total super balance is measured at the previous 30 June, not at the time a contribution is made.

Concessional contributions

A concessional contribution to your super is a voluntary payment you make from your before-tax income directly to your super balance. Instead of being taxed at your marginal income tax rate, concessional super contributions are taxed at a rate of 15%.

The concessional contributions cap - or the amount of extra money you can add to your super balance for the year and retain the tax discount - will remain at $30,000 from 1 July 2025.

This also impacts the concessional contributions that can be made under the so-called 'five-year carry forward' rules by those with a total super balance of less than $500,000 at the previous 30 June. (This is not indexed.)

So, those who have a super balance below $500,000 on 30 June 2025 will be able to make up to $137,500 in concessional 'carry forward' contributions over the 2025-26 financial year.

This incorporates maximum contribution amounts for the previous five years, as follows:

• $25,000 for 2020-21

• $27,500 for 2021-22

• $27,500 for 2022-23

• $27,500 for 2023-24

• $30,000 for 2024-25

They can also use the concessional contribution cap of $30,000, bringing the total concessional contributions cap to $167,500 in 2025-26.

(From 1 July 2025, any unused concessional contributions from 2019-20 will no longer be able to be used.)

Non-concessional contributions

The non-concessional contributions cap - any contribution made to your super from after-tax earnings - is calculated at four times the concessional cap, so 4 * $30,000, or $120,000 for the 2025-26 financial year.

The two- and three-year bring forward limits also remain at $240,000 and $360,000 from 1 July 2025.

However, the total super balance (TSB) thresholds for determining eligibility to make non-concessional contributions will change, as outlined in the table below:

TSB threshold 2024-25	NCC cap (annual)	Bring forward period	TSB threshold (from 1 July 2025-26)	Maximum contribution cap
$1.9m or more	$0	N/A	$2m+	$0
$1.78m to <$1.9m	$120,000	Permitted within applicable financial year	$1.88m to <$2m	$120,000
$1.66m to <$1.78m	$240,000	2 years	$1.76m to <$1.88m	$240,000
Less than $1.66m	$360,000	3 years	Less than $1.76m	$360,000

Changed rules for older 'legacy' pensions impacting SMSFs

In December 2024, the federal government relaxed rules surrounding certain 'legacy' retirement products, allowing people to exit a specific range of these products (see below) for the next five years.

For many years, some retirees with lifetime, life expectancy, and market-linked pensions have faced restrictive rules that have made it difficult for them to change or adjust their pensions. (It's worth noting the products can be held with any superannuation provider, including SMSFs and APRA-regulated retail superannuation funds.)

Although the market has moved on, many people have had to remain in these pension arrangements, even if they no longer suited their needs. Previously, the only way to change these pension set-ups was to convert them to similar products which also came with limits on how reserves could be allocated that didn't count towards contribution caps.

What are the changes?

As of December 2024, a super fund member has the option to exit an eligible legacy retirement product (subject to a fund's trust deed) if:

• It commenced prior to 20 September 2007, or commenced because of a conversion of an earlier product that began before that date

• It is a superannuation income stream product that is a:

1. lifetime pension or annuity (except if paid from a large APRA regulated super fund that is a defined benefit fund)

2. life expectancy pension or annuity

3. market-linked pension or annuity

Members can have the option of commuting the existing pension and using the proceeds to start a new account-based pension, roll it back into accumulation phase, or take the cash as a lump sum payment outside the superannuation system. (Partial commutations are not permitted.)

Things to keep in mind for legacy SMSF pension changes

Eligibility

The changes apply to specific pensions only.

Deed update

Some SMSF trust deeds may need to be updated to allow for existing pension arrangements to be commuted or converted to a lump sum.

Deadline

There is a five-year window to exit legacy pension arrangements with the period ending 6 December 2029.

Seek professional advice

It is strongly advised both SMSF fund trustees and directors as well as members converting from legacy retirement products obtain professional financial and/or tax advice before proceeding.

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