Research Highlights Missed Opportunity for Australian Super Savers
New research from Vanguard reveals that nearly half of all Australians (46%) have never made a voluntary contribution to their superannuation — a finding that points to a significant and largely overlooked opportunity to strengthen retirement outcomes.¹
Under current superannuation legislation, eligible individuals may contribute beyond their employer's mandatory payments, up to a concessional cap of $30,000 for the 2025–26 financial year. However, a lesser-known provision — the carry-forward rule — allows individuals to access unused contribution capacity from the preceding five financial years, potentially enabling a substantially larger one-off contribution in a single year.
For an individual who has made limited or no voluntary contributions over the past five years, accumulated unused capacity could reach up to $137,500. Combined with the current annual cap, this could allow total concessional contributions of up to $167,500 in 2025–26 — a meaningful lever for those in a position to act before 30 June.
Renae Smith, Chief of Personal Investor at Vanguard Australia, noted that a common misconception is driving inaction: "Many Australians assume that if they miss contributing in one year, that opportunity is lost. But the carry-forward rule means those missed contributions can potentially be used later, when people are better placed financially."
The rule is particularly relevant for individuals who have experienced career breaks, variable income, or received lump sums such as bonuses or inheritances. Eligibility is subject to a total superannuation balance of less than $500,000 at 30 June of the preceding financial year.
Against a backdrop of sustained cost-of-living pressures and the Federal Budget, superannuation remains one of the most tax-effective long-term investment structures available to Australians. Concessional contributions are generally taxed at 15% — though higher-income earners may be subject to an additional tax under Division 293, increasing the effective rate. The flexibility to make larger contributions in years where cash flow permits allows individuals to compensate for periods of constrained saving and make more meaningful progress toward their retirement goals.
Timing is critical. Members wishing to make a personal contribution from after-tax income should do so at least one week prior to 30 June to allow sufficient processing time. Additionally, those intending to claim a tax deduction must submit a Notice of Intent to Claim a Deduction to their superannuation fund before lodging their income tax return.
For Vanguard Super members specifically, the deadline for additional personal contributions to be counted in the current financial year is Thursday, 25 June 2025.
Ms Smith offered a timely caution: "Unused caps don't last forever. If you don't use it, you lose it. Understanding what you have available — and acting before it expires — is critical."
Broader structural reforms, including the forthcoming payday superannuation regime, further reinforce the importance of active engagement with superannuation arrangements and a thorough understanding of the contribution rules available under current legislation.
Source: Vanguard's How Australia Retires Report, 2025.
Rick Maggi CFP, Financial Advisor (Perth), Westmount Financial