For a long time, superannuation has given many Australians a quiet “retirement boost” in the form of tax breaks that helped their savings last longer and their income go further. That boost is getting smaller in 2026. A new super rule is taking away up to $7,500 a year from some Australians’ retirement income, especially those with higher balances or certain retirement-phase arrangements.
The change isn’t big or sudden. But for retirees who are affected, the effects are real and often surprising.
This is what the rule does, who is losing up to $7,500 a year, and why people are surprised by the effect.
What Happened in 2026
The change is due to stricter enforcement of superannuation tax and earnings rules during retirement, as directed by the Australian Government and carried out by the Australian Taxation Office.
Some important parts of the change are:
- Higher taxes on income over certain balance levels
- Less favourable treatment for some parts of large super balances
- Less willingness to limit losses to keep tax-free growth
- More strict enforcement of retirement-phase limits
Each measure, on its own, seems small. When you add them all up, they lower your income after taxes, sometimes by a lot.
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How to Lose Up to $7,500 a Year
There isn’t just one fee or tax bill that adds up to $7,500. It shows that retirees have lost benefits that they used to rely on.
Some common reasons for the loss are:
- More taxes on income above new or more strictly enforced limits
- Less tax-free growth on big balances
- Changes to drawdown strategies that had to be made
- Less ability to hide extra balances in structures with low taxes
For retirees with a lot of super, even a small percentage change can mean thousands of dollars a year.
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Who is most affected?
Most Australians won’t notice this change at all. But one group is getting hit the hardest.
The people who are most at risk are:
- Retirees who pay for their own retirement with higher super balances
- Australians who have big account-based pensions
- SMSF members who own growth assets
- Retirees who depend on super earnings more than drawdowns
For these groups, the “retirement boost” that used to help them make ends meet is now smaller or gone completely.
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Why This Feels Like a Cut, Even Though It Isn’t One
Nothing has been “cut” in an official way. Payments haven’t been cut by law. The system now lets less benefit build up tax-free, though.
Retirees say it feels like a cut because:
- Even though the balances stay the same, net income goes down.
- The assumptions we made about planning are no longer true.
- Earnings that were expected don’t happen
- Money goes to taxes instead of income.
A retirement planner said, “People planned for a system that rewarded big balances.” The reward is now limited.
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Stories from Real Retirees
Michael, who is 70 and lives in Melbourne, said that his yearly income dropped out of the blue.
He said, “My balance didn’t change.” “But my income forecast did. I’m losing several thousand dollars a year.
Anne, a trustee for an SMSF in Perth, said the loss was slow but obvious.
“It’s not one big hit,” she said. “It’s the slow erosion that hurts.”
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The Reason the Government Did This
Officials say that the changes are not about punishment, but about fairness and sustainability.
Advisors to the government say:
- Super was meant to help people save for retirement, not build up tax-free wealth.
- People with very large balances get big tax breaks.
- The price of concessions has gone up a lot.
- The system needs to stay cheap for a long time.
Policymakers say that super should help with retirement income, but it shouldn’t keep going up forever.
Expert Insight: Who Loses the Most
Financial experts say that retirees who planned to live mostly off of super earnings will lose the most.
Some important things to know are:
- Strategies that focus on making money don’t work as well.
- Large balances are no longer getting as much out of them.
- Timing of drawdowns is more important than ever.
- Planning your income is better than hoarding your balance.
One analyst said, “The time of letting super sit and grow tax-free forever is over.”
What This Does Not Change
Even though there is worry, some basic things are still the same:
- Access ages haven’t changed
- Super is still better for taxes overall.
- Average balances don’t change.
- The amount that employers contribute stays the same.
- The Age Pension system is still separate.
This is an improvement, not a breakdown.
What retirees should look over now
Experts say that if you think you might be affected, you should:
- Looking at how much of your super is above important limits
- Looking into how taxes are being taken out of pay cheques
- Stress-testing income when net returns are lower
- Thinking about whether drawdown strategies still work
- Getting advice before making changes to the structure
Sometimes, small changes can help you get some of your lost income back.
