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The superannuation body has urged the incoming government to reform superannuation tax policies to strengthen fairness, enhance universality and invest in national priorities.
ASFA proposes tax policies for strengthening super sector
22 April 2025
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8 minute read
As part of its 2025 policy priorities, the Association of Superannuation Funds of Australia (ASFA) is calling for various tax and policy reforms within the superannuation sector to provide certainty and stability.
ASFA said it was also asking for specific, targeted reforms that would help ensure future generations of Australians enjoy dignity in retirement while reinforcing Australia’s economic resilience.
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Strengthening fairness in retirement, implementing payday super, protecting super for Australians’ retirement, improving retirement outcomes through quality advice, reinforcing consumer choice, harnessing the strength of superannuation and upholding a stable and efficient super system were the key priorities it outlined.
Within these, ASFA was pushing for the expansion of the low-income superannuation tax offset (LISTO), reducing tax on hardship superannuation withdrawals, ensuring fair superannuation taxation for Pacific Island workers, tax and regulatory reforms to facilitate institutional investment in residential housing supply and strengthened enforcement of superannuation guarantee (SG) compliance.
If adopted by the government, all policy recommendations would provide stability in superannuation tax and policy settings, according to Mary Delahunty, chief executive of ASFA.
Delahunty said an incoming government should ensure stability in superannuation policy settings, preventing further erosion of the system’s integrity and certainty for members.
“Long-term policy stability is essential to maintaining trust in superannuation. Frequent changes to tax settings and regulatory requirements create uncertainty for both funds and members.”
“Superannuation should be governed by a predictable and balanced policy framework that minimises regulatory duplication, thus reducing compliance burdens, ensuring that funds can focus on delivering strong returns and high-quality services.”
The body recommended that the incoming government expand the LISTO by raising the upper income threshold and the maximum amount payable under the LISTO to ensure low-income earners did not face a disincentive on their super contributions.
This reform was essential to addressing inequities in super accumulation, particularly for part-time and casual workers, Delahunty noted.
The body also stressed changes to LISTO were crucial based on recent government income tax cuts, which would lead to over one million low-income workers having the small tax advantage for their super contributions further reduced.
Additionally, an incoming government should reduce the tax charged on superannuation withdrawals made under compassionate and hardship grounds, as well as reduce the tax on super payments for Pacific Island workers under the PALM scheme with temporary work in Australia.
ASFA revealed that an incoming government should also provide additional funding to the ATO to enhance compliance efforts and recover unpaid SG from employers, as well as ensure the fair distribution of tax concessions by supporting measures such as LISTO and Division 296.
Delahunty added that the Australian super system was working well for 17 million Australians with super accounts, but reforms were needed to ensure it continued to build prosperity and provide financial security.
“This federal election, ASFA is calling for targeted and coordinated reforms that protect and build upon the strengths of Australia’s superannuation system, including maintaining the elements that make our system work: preservation settings, improving equity outcomes, and ensuring the system remains a pillar of national economic stability,” she said.
“If adopted, ASFA’s recommendations will enable superannuation to continue to deliver strong retirement outcomes for individuals that will allow them to retire with dignity, while also playing a critical role in funding infrastructure, housing and business investment.”
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