Transfer balance cap
A lifetime limit on how much super you can move into a tax-free retirement pension account.
The transfer balance cap limits the amount that can be transferred into retirement phase, where investment earnings are entirely tax-free. Amounts above the cap must stay in accumulation phase, where earnings are taxed at up to 15%.
The cap is indexed over time, and individuals have a personal cap depending on when they first started a retirement income stream. Two people retiring in different years can have different personal caps.
Exceeding the cap results in a determination requiring the excess to be removed from retirement phase, along with tax on the notional earnings attributable to the excess.
Splitting across two phases
A retiree with a balance above the cap moves the capped amount into a tax-free pension account and leaves the remainder in accumulation, where earnings continue to be taxed at up to 15%.
The bit people get wrong
The cap applies when you start the pension, not continuously. Growth after commencement does not breach it, so an account can grow well beyond the cap without any problem.
Common questions
What is my personal transfer balance cap?
It depends on when you first commenced a retirement phase income stream and how much of the cap you used. Your personal cap is shown in myGov under ATO super services.
Can I have more than one pension account?
Yes. The cap applies across all your retirement phase income streams combined rather than to each account separately.
What happens to money above the cap?
It stays in accumulation phase, still concessionally taxed at up to 15% on earnings, which remains well below most marginal rates.