Looking beyond super for certainty in an uncertain environment

Produced in partnership with Generation Life.

It’s almost that time of year again. Next week, Treasurer Jim Chalmers will deliver the FY27 Federal Budget, detailing Treasury’s estimated revenues and expenditures, as well as the government’s intentions and priorities for the financial year ahead. Media speculations are well underway with the odd leak about what the Budget likely contains and who the “winners” and “losers” may be.

Historically, changes to the tax-effective treatment of superannuation have not been a foreign concept and that may continue as more assets move into pension phases, where earnings are tax-free up to the transfer balance cap or concessionally taxed.

As Australia’s population ages and fiscal pressures increase, particularly around healthcare and retirement funding, the long-term sustainability of tax concessions within superannuation is coming under greater scrutiny.

With a growing proportion of assets moving into pension phase, where fewer working Australians contribute to income tax, the policy focus has increasingly shifted towards how the system is taxed, not just how it is funded.

Recent reforms reflect this direction. The government’s latest changes, which were enacted on 13 March for FY27 commencement, were first flagged in the 2023 Federal Budget and formed part of a broader wave of reforms to recalibrating superannuation settings over time.

Other memorable Budgets include the 2016 Turnbull-Morrison Budget which contained changes to retirement income policies, and the infamous 2006 Howard-Costello Budget, probably best remembered for the one-off window of opportunity to contribute $1 million tax free to super.

In this environment, rule certainty is no longer a by-product of a well-constructed strategy, it is something to be deliberately designed for and considered from the outset of any strategy.

Small changes, big ramifications

While the Division 296 tax is expected to impact a relatively small number of Australians with earnings from super balances over $3 million, it’s another iteration in a long pattern of reforms, continuing a 30-year trend of policy changes that has fuelled uncertainty in the system, particularly among retirees, pre-retirees and high-net-worth individuals, according to CoreData.

According to Generation Life’s 2025/26 Navigating Uncertainty Report, which surveyed more than 650 wealthy Australians and around 350 financial advisers, retirement confidence has fallen sharply among HNWI, with 71 per cent saying that they feel less confident about their financial security than they did three years ago, and 61 per cent sceptical of the retirement system’s ability to build and protect long-term savings.

The highest level of uncertainty was recorded amongst respondents aged 60 and over, however, “mid-life” HNW Australians between aged between 30 and 49 also reported high levels of uncertainty and systemic pressures.

Importantly, this uncertainty is no longer just influencing sentiment, it is changing behaviours.

In the last 12 months, 13 per cent of HNW Australians reduced or stopped making superannuation contributions. Almost 40 per cent claimed to be acting on the advice of their financial adviser and one-third attributed their decision directly to the government’s proposed Division 296 tax and other policy changes.

And it’s not just older Australians who have responded to the policy uncertainties, mid-life HNW Australians are also adjusting their behaviours, signalling that vigilance is spreading across generations.

When making financial decisions, HNW Australians across the board are placing great weight on how future policy changes could affect their plans, according to Generation Life chief executive officer, Felipe Araujo.

“Super rule changes are right up there, alongside inflation, as key household concerns,” he tells Professional Planner.

“There is clear movement across the HNW population, with contribution patterns and advice interactions increasingly shaped by the broader policy environment.”

Araujo says the shift goes beyond concern about individual policy changes and reflects something deeper.

“What we’re seeing is not just a reaction to specific reforms, but growing uncertainty around the predictability of the rules of the system itself,” he says.

“For clients planning across decades, that can change how they think about risk. It’s no longer just market volatility they’re managing but moreover, policy risks, and that requires a different approach to investment strategies and how they are structured.”

Araujo likens Division 296 to the proverbial straw that broke the camel’s back, but says Australia’s changing tax and superannuation settings create opportunities for advisers to deepen client engagement and educate them about the alternative investment structures that can be used to build wealth.

For example, investment bonds can offer flexibility, simplicity and certainty for those looking to not only build wealth but preserve and transfer it to future generations.

“Superannuation remains the most tax effective way to save for retirement but the focus on non-super assets, especially for wealthy individuals and families, is growing,” Araujo says.

“Division 296 is a stark reminder for many Australians that long-term retirement planning must now contend with ever-shorter policy cycles, which weighs on the confidence of even financially resilient households.

“As a result, rule certainty is becoming something that needs to be deliberately designed for as part of an investment strategy, not assumed. Advisers have a critical role to play in educating clients about the various solutions and structures available to them and the optimal amount of wealth to hold inside and outside super.”

Flight to certainty

This shift is unfolding against a broader backdrop of global economic and geopolitical turbulences, market volatility and continued pressure on household budgets.

At the same time, Australia is entering a period of significant intergenerational wealth transfers[1], likely to bring about an increasing sense of complexity surrounding the long-term implications of financial decisions.

Together, these forces are driving a growing focus on alternate sources for certainty. For many investors, the question is no longer just how to grow wealth, but how to structure it in a way that may be sustainable as other conditions and policy settings continue evolving.

“Advisers who are experts in superannuation and tax legislation as well as retirement and legacy planning, are strongly positioned to support their clients’ changing needs,” Araujo says.

“We’re seeing a meaningful shift in the questions that Australians want answered,” he says, citing research that around 70 per cent of HNW Australians talked to their adviser about the Division 296 reforms in the 12 months’ prior.

“Super tax settings have now become a huge focus, alongside retirement and the great wealth transfer, not because people are changing their goals but because they want clearer direction and certainty on the rules that frame post-accumulation plans.”

While the government is likely to leave superannuation alone in next month’s Budget, for many, the damage has been done.

A behavioural shift is already well underway, as the intergenerational transfer of wealth accelerates. The focus is moving beyond relying on a single system toward building strategies that balance flexibility, sustainability and rule certainties over time.

For advisers, the implications are clear.

In a system where the rules look to continue evolving, value is no longer defined solely by optimal performance outcomes, but by helping clients structure wealth in a way that may better contend with tax and super rule changes.