Australia’s superannuation system remains one of the most effective vehicles for building long-term retirement wealth. But after decades of expansion and generous contribution incentives, the landscape may appear to be shifting. Preservation, fiscal sustainability and equity have become central policy priorities, signalling a new era for retirement planning and wealth management.
Amid this, financial advisers are reshaping their strategic conversations with clients, particularly high-income earners, those approaching or exceeding superannuation caps and those that have large super balance amounts. Increasingly they are turning to alternative structures like investment bonds to complement their retirement savings and support broader financial goals.
A Policy Environment Focused on Preservation, Not Access
The Superannuation (Objective) Act 2024 set the government’s vision for the system: superannuation exists to preserve savings for income in retirement, delivered equitably and sustainably. This legislative clarity marked a turning point. Super should no longer treated only as a savings pool but as a protected retirement income mechanism.
Reforms such as payday super, commencing 1 July 2026, reinforce this principle by ensuring contributions are paid in real time with wages. The intention is clear – strengthen the system, improve compounding outcomes for workers and minimise unpaid super.
At the same time, the government is directing flexibility toward the retirement phase. Through initiatives like the Retirement Income Covenant and the Retirement Phase Reforms , super funds have been put on notice that they should provide higher quality retirement income solutions, clearer guidance and more transparency around decumulation strategies. The policy message is unmistakable: access remains restricted, but reforms are coming for more flexible options for dealing with super once Australians reach retirement.
Why investment bonds matter now more than ever
With uncertainty around potential further tightening super settings, investment bonds are asserting their value as a long-term, tax-efficient complement to superannuation. They provide clients with a way to continue accumulating wealth efficiently once super contributions have been maximised or when proposed measures such as Division 296 increase their tax exposure.
Their appeal lies in several features that differentiate them from superannuation:
• No contribution caps – allowing unlimited investment
• No preservation rules – investment proceeds can be accessed at any time
• No age-based restrictions – can be suitabile across all life stages
• Tax-paid structure – earnings do not appear in personal tax returns1
Beyond accumulation, investment bonds can also provide estate-planning simplicity. Appropriately structured bonds with beneficiary nominations allow assets to bypass probate, making them effective for intergenerational transfers. They may also help fund goals for the next generation such as education or a home purchase, when tax efficiency and liquidity are equally important.
For investors balancing retirement planning, liquidity needs and legacy goals, investment bonds can complement superannuation by filling structural gaps that super, by design, cannot.
Tax Efficiency: The Engine Behind Investment Bonds
Investment bonds have emerged as an attractive complement for clients who have already maximised their super contribution caps. Their appeal lies in both their structure that provide tax efficiencies and control for investors.
Investment bonds are taxed within a life insurance company at a maximum rate of 30 per cent, in line with the corporate tax rate. However, the average long-term effective tax rate of some providers can be much lower. This can be achieved because of the investment bond tax structure that life companies operate under. Operating on ‘revenue account’ provides distinct advantages when it comes to tax management.
By actively managing gains, losses and franking credits, investment bond providers have the potential to reduce the long-term average annual effective tax rate on growth-style strategies to as little as 10–15 per cent. The tax structure of investment bonds enables some tax benefits to be recognised sooner when compared to investing in your own personal name. This has the benefit of reducing tax payable earlier with more funds remaining invested, compounding this benefit over time.
Are Investment Bonds Likely to Face Policy Change?
Despite the growing popularity of investment bonds, the risk of legislative change remains low. The investment bond market is a fraction of the size of superannuation, less than $15 billion compared with super’s $4 trillion2 , and it does not affect Age Pension eligibility or government budget forecasts in the same way.
Investment bonds are fiscally neutral: they offer no upfront deduction, pay tax at a rate of 30 per cent (just like companies), and can generate consistent revenue. In contrast to super’s concessional structure, investment bonds already contribute their fair share. In an environment where government policy looks to tighten rather than expanding super concessions, we consider that investment bonds are more likely to remain stable than to become a new policy target.
Choice, Scale and Security
The investment bond market has expanded substantially, with some providers offering a broad and diverse range of investment options across areas such as Australian and global equities, fixed income and multi-asset strategies. This breadth enables advisers to tailor solutions to a wide range of client risk profiles and objectives.
Underlying these investments is the security of the fund structure. Assets are held in segregated funds, independent of a provider’s corporate balance sheet. APRA’s prudential framework provides options in the unlikely event that a provider comes into financial issues, which may include requiring the funds be transferred to another life company, preserving the investment value. Investors would also have the ability to withdraw proceeds, offering both protection and flexibility.
Managing the long-term commitment concern
A common question from advisers is whether clients should worry about committing to a single investment bond provider, given that withdrawing from an investment bond and starting a new investment bond with another provider restarts the 10-year tax rule and may trigger tax consequences if the withdrawal is pre-10 years.
When evaluating investment bond providers, advisers typically consider:
• the breadth and quality of investment options
• the associated features, including estate-planning features such as beneficiary nominations and ownership transfer mechanisms
• the level of service and investor experience
• the commitment of the provider for the long-haul.
Change over costs and tax should be considered as part of any change or disposal decision made, whether it’s an investment bond, shareholding or any other investment.
Integrating Investment Bonds with Broader Estate Planning
Investment bonds can sit naturally alongside superannuation, discretionary trusts and wills. Each structure plays a distinct role in wealth management: superannuation remains the cornerstone for retirement income; trusts offer flexibility for complex family arrangements; and wills and probate govern formal asset distributions.
Investment bonds complement these structures by offering estate planning certainty, tax efficiency and liquidity, particularly where assets are intended for non-dependants, where there are complex family arrangement or dynamics, or when probate-free transfers are desirable.
The road ahead for financial advisers
As the superannuation landscape looks to increasingly change, advisers play a critical role in helping clients future-proof their strategies.
That means understanding not only what’s changing in super, but also how complementary vehicles such as investment bonds can help to fill the gaps, delivering flexibility, tax efficiency, and control.
With superannuation potentially facing more reform, investment bonds are stepping into the spotlight as a stable, and tax-effective solution that can enable Australians to grow, protect, and transfer their wealth with confidence.
Discover Generation Life’s award-winning, tax-optimised investment bonds – designed to help Australians build intergenerational wealth with certainty. Learn more at www.genlife.com.au/investment-bonds.
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Reference
1. If there are no withdrawals made within 10 years from when first invested: 10-year tax rule.
2. IFA $3m super balance tax: An opportunity to think beyond superannuation for major life expenses million super, June 2025, assessed 21 November 2025
Disclaimer:
Generation Life Limited (Generation Life) AFSL 225408 ABN 68 092 843 902 is the product issuer. This communication 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. Any superannuation general financial product advice provided is by Generation Development Services Pty Limited ABN 14 093 660 523 as Corporate Authorised Representative No. 001317211 of Evidentia Financial Services Pty Ltd AFSL 546217. The Product Disclosure Statement (PDS) and Target Market Determination (TMD) are available at www.genlife.com.au and should be considered before making an investment decision. Investments carry risk. Past performance is not an indication of future performance. Generation Life’s investment bonds are considered as providing certainty and stability 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.
