“This approach not only helps mitigate the risks posed by potential legislative change, but also provides much-needed flexibility, resilience and control. With superannuation and trusts under constant review, Australians face real uncertainty from shifting rules and new taxes.”
A long history of shifting rules
Successive governments have repeatedly adjusted the super system’s tax and contribution settings. The Division 293 tax in 2012 effectively lifted the rate on contributions for higher-income earners; the Transfer Balance Cap in 2017 limited how much could be moved into tax-free retirement accounts. Each reform pursued its own policy goal, but the cumulative effect has been a complex framework that few may describe as stable.
Araujo says the pace of change means individuals and advisers should think more broadly about how to protect and grow wealth over time. “Relying solely on one structure exposes investors to unnecessary risk,” he says. “Diversification across structures – superannuation, family trusts, and investment bonds – is widely seen as the best way to manage that uncertainty.”
Investment bonds in the mix
One structure drawing attention is the investment bond. Unlike fixed-interest bonds that pay a set rate, investment bonds are tax-paid investment vehicles governed under the Life Insurance Act. They can hold a range of asset classes and have remained largely untouched by the constant waves of super and tax reform.
Araujo says investment bonds complement superannuation and trusts by adding flexibility, tax efficiency and certainty to a diversified wealth strategy.
“While superannuation provides long-term retirement savings and trusts can help manage family wealth, both are often exposed to legislative reforms and complex reporting requirements,” he says.
“Investment bonds operate under well-established rules in a tax-paid environment, offering flexible contributions, tax-free withdrawals after 10 years and estate-planning benefits such as direct beneficiary nominations.
“They can also sit within a discretionary or family trust, allowing trustees to reduce – or even eliminate – distributable income, simplifying tax outcomes and enhancing long-term efficiency.”
For families, this structure can play a role in wealth transfers. Because ownership can be assigned outside a person’s estate, assets can be passed to beneficiaries frequently administering greater certainty over timing and conditions.
At the coalface
Financial advisers are seeing these concerns play out in real time. Troy Chapman, chief executive of Country Wide Wealth, says the stop-start nature of policy change has made Australians wary of committing more than the compulsory minimum to super.
“Every time they tinker with the system, people lose confidence,” says Chapman. “Once that happens, they just stick to what is mandated and look elsewhere for their savings.”
Chapman says diversification is now central to most client conversations. “Super will always be foundational, but no one wants to build their entire retirement strategy on shifting sands,” he says. “People are asking for flexibility and certainty, and that’s driving interest in complementary structures such as investment bonds.”
He adds that the ability to use investment bonds across different life stages is part of their appeal. “We’re using them for accumulators building long-term savings, for parents setting aside funds for children, and for grandparents focused on estate planning,” Chapman says.
“They offer a tax-paid environment that feels familiar to people who understand super, without the same preservation restrictions or exposure to constant policy change.”
A broader shift in mindset
The message from both industry leaders and advisers is that resilience now depends on diversity. Superannuation remains core, but it is only one pillar in a broader wealth-planning framework that must be able to absorb political and economic change.
As Araujo puts it, “Super is still a core part of retirement savings, but it may no longer be sufficient in isolation – particularly for those with larger balances or more complex family circumstances. A diversified approach helps Australians stay in control, whatever happens next.”
To learn more, please visit Generation Life.
Generation Life Limited AFSL 225408 ABN 68 092 843 902 (Generation Life) is the product issuer, provides general financial product advice and other services related to investment life insurance products and life risk insurance products. Any superannuation general financial product advice provided is by Generation Development Services Pty Limited ABN 14 093 660 523 (GDS) as Corporate Authorised Representative, No. 001317211 of Evidentia Financial Services Pty Ltd AFSL 546217 ABN 97 664 546 525 (Evidentia). The information provided is general in nature and does not consider the investment objectives, financial situation or needs of any person and is not intended to constitute personal financial advice. The product’s Product Disclosure Statement (PDS) and Target Market Determination (TMD) are available at www.genlife.com.au and should be considered in deciding whether to acquire, hold or dispose of the product. Superannuation products’ PDSs, offer documents and TMDs are available via the websites of their product issuers. Professional financial advice is recommended. Generation Life’s investment bonds can provide certainty as they are governed by legislation that has changed infrequently and can be appropriately structured to bypass an estate and be protected in case of bankruptcy of the life insured. Investments carry risks. Past performance is not an indication of future performance.
