Superannuation Trends Strengthen as Australians Leverage Voluntary Contributions and Downsizer Opportunities

By Craig Phillips, Snr Financial Adviser Phillips Wealth Partners

Data from the Australian Prudential Regulation Authority (APRA) highlights a powerful shift in the way Australians are using the superannuation system to build long‑term wealth, prepare for retirement, and support major financial goals such as home ownership. Thecurrent figures confirm sustained growth across voluntary personal contributions, total superannuation assets, and member‑driven savings behaviour. At the same time, strategies such as downsizer contributions continue to attract interest, particularly among older Australians looking to boost their retirement balances efficiently and outside traditional contribution caps.

Voluntary Personal Contributions Surge

One of the most pronounced trends has been the increase in voluntary personal superannuation contributions. In the 12 months to March 2025, Australians contributed a record $55.7 billion voluntarily, representing a 26.9 per cent rise compared with the previous year. This level of growth is significant, especially given the broader cost‑of‑living pressures experienced across the economy during the same period.

These voluntary contributions often include savings channelled through the First Home Super Saver Scheme (FHSSS), a program that enables individuals to make additional personal contributions to super and later withdraw them for a first‑home deposit. While cumulative FHSSS participation numbers are not specified in the publicly released data, the surge in member‑driven contributions strongly indicates that many Australians are choosing superannuation as a tax‑effective vehicle for accumulating deposit savings.

APRA’s September 2025 quarterly performance publication reinforces this upward trajectory. Member contributions grew by 23.6 per cent over the year to reach $62.4 billion, and total contributions across the system rose to $215.6 billion, an increase of 12.7 per cent. Employer contributions increased by 8.8 per cent, highlighting the combined momentum of both compulsory and discretionary saving behaviours.

Superannuation Assets Reach $4.5 Trillion

Superannuation continues to be one of the most powerful and resilient components of the Australian financial system. As at September 2025, total superannuation assets had grown to $4.5 trillion. This represents a 9.4 per cent increase from September 2024 and a 3.0 per cent rise in the most recent quarter alone.

Of the $4.5 trillion total:

• $3.2 trillion is held within APRA‑regulated funds
• $1.07 trillion sits in self‑managed superannuation funds (SMSFs)
• The remaining balance is spread across exempt public sector schemes and statutory funds

Australia’s retirement savings system now represents one of the largest and most sophisticated pension pools globally. The continued strength of inflows, investment earnings and voluntary behavioural shifts indicates that Australians are increasingly using super as a central long‑term planning tool rather than merely a compulsory savings mechanism.

Downsizer Contributions Remain a Powerful Strategy

While voluntary contributions are rising across the population, older Australians continue to show strong interest in strategic contributions that sit outside standard contribution caps. Since July 2018, downsizer contributions have allowed eligible individuals to contribute up to $300,000 per person from the proceeds of selling their principal residence, without affecting their non‑concessional contribution (NCC) limits.

Between the scheme’s commencement and June 2024, approximately 78,600 people made downsizer contributions, totalling around $19.9 billion. The attractiveness of this measure is clear: downsizer contributions enable eligible individuals aged 55 or over to move significant capital into the tax‑advantaged superannuation environment, irrespective of their total super balance or age.

Key eligibility rules include:

• The home must have been owned for at least 10 years
• It must be located in Australia and qualify for the main residence capital gains tax exemption (in whole or part)
• The individual must be aged 55 or older at the time of contribution
• Contributions must be made within 90 days of receiving sale proceeds
• The contribution cannot exceed $300,000 per individual or the sale proceeds received
• The downsizer form must be lodged before or at the time of contributing

These rules offer considerable flexibility. Notably, the contribution does not need to come directly from the sale proceeds, and individuals do not need to purchase another property. This opens the door to strategic planning options such as recontribution strategies, tax‑free component optimisation, and superannuation equalisation between spouses.

Social Security and Aged Care Considerations

While the downsizer contribution is compelling, it is essential to consider its impact on social security and aged care means testing. The treatment of proceeds from a home sale depends on whether the funds are intended for reinvesting into another home and whether the individual is yet to reach Age Pension age.

For those who have not yet purchased or built a new home, sale proceeds may be exempt under the principal home sale proceeds rule for up to 24 months. However, if the proceeds are contributed to super as a downsizer contribution and there is no intention to purchase another home, the amount becomes assessable under both assets and income tests for people of Age Pension age.

For individuals entering residential aged care, the sale of the family home can substantially alter assessable assets, particularly if the proceeds are no longer protected by the capped home value rules. In such cases, the decision to make a downsizer contribution should be weighed carefully against potential increases in accommodation or means‑tested care fees.

A Growing Appetite for Strategic Superannuation Planning

APRA data reveals a clear and ongoing behavioural trend: Australians are increasingly engaging with superannuation as a strategic planning tool rather than treating it as a passive system. From younger buyers using voluntary contributions to accelerate their path to home ownership, to retirees leveraging downsizer strategies to optimise their retirement income and tax position, the system is being used more actively and intentionally.

The growth in both total assets and voluntary contributions demonstrates not only confidence in the superannuation framework but also a recognition of its long‑term advantages. As regulatory settings evolve and planning opportunities such as downsizer contributions remain available, it is expected that Australians will continue to prioritise superannuation as a strategy for their financial wealth building.