The $3 Million Super Tax: A Prompt to Rethink How We Save

With the government now pushing ahead with plans to double the tax rate on earnings from superannuation balances above $3 million, there’s been a noticeable shift in how people are talking about savings and wealth strategies. What was once seen as a niche concern for the ultra-wealthy is increasingly being viewed through a broader lens — especially by younger Australians looking to the future.

The change means that individuals with more than $3 million in super would see earnings above that point taxed at 30%, instead of the 15% rate that currently applies. While that still leaves the bulk of Australians unaffected for now, it’s worth recognising that what seems like a high threshold today may not be so in 20 or 30 years’ time. Inflation, wages, and investment growth all compound over time — and future retirees could find themselves crossing that line sooner than they’d expect.

The Super System Has Served Us Well — But It's Not the Whole Picture

Australia’s superannuation system has played a huge role in building long-term wealth at a national level. It’s been a relatively stable, tax-friendly framework — and for many, it’s still the default when thinking about retirement.

But this proposal has reignited a conversation that’s often been in the background: are we too narrowly focused on super?

There are plenty of important financial milestones that don’t align with retirement timelines. Buying a home, starting a business, taking a career break, or helping family financially — these are life events that often happen well before preservation age.

A Wider Toolkit

With growing awareness of policy risks around super, people are starting to show more interest in other structures that allow for tax-effective investing without locking money away until later life.

One option getting a bit more airtime lately is investment bonds. They’ve been around for decades, usually offered by friendly societies and mutuals, but they’re starting to attract attention again. The appeal is in their flexibility — earnings are taxed within the bond at a flat rate (currently 30%), and after holding for 10 years, the funds can generally be accessed tax-free. Unlike super, there are no age-based restrictions on withdrawals.

They also come with a range of investment choices — from low-risk to high-growth options — which makes them familiar territory for those used to managed funds or super menus.

A broader conversation

What’s notable in all this is the underlying shift in sentiment. People aren’t just reacting to the new tax. They’re thinking more critically about how much control they really have over their money when it sits in a system that can change with every federal budget.

That’s not necessarily a call to exit super or overhaul everything. But it does raise reasonable questions about diversification — not just in asset classes, but in how and where wealth is held.

Super is still a key part of the long-term equation for most Australians. But it doesn’t have to be the only part.