What is the transfer balance cap?
The transfer balance cap is a limit on the total amount of super you can transfer into tax-free retirement income streams during the ‘retirement phase’ of superannuation.
The current transfer balance cap is $1.9 million as of 1 July 2023.
Did you start your income stream before 1 July 2023?
If you started your income stream before 1 July 2023, your personal transfer balance cap will be between $1.6-1.9 million, depending on your circumstances.
What counts towards the transfer balance cap?
The cap applies to all ‘retirement phase’ income streams and includes any death benefits you take as an income stream.
You can leave any remaining amount you have over your personal cap amount in your super account.
The cap applies to the money you hold in any retirement income stream account (with us or elsewhere) so it’s up to you to make sure you don't go over.
What’s not counted towards the transfer balance cap?
The transfer balance cap is not applied to:
- Transition to retirement accounts
- Investment earnings made in the retirement phase (so if your retirement income account balance grows over your personal cap amount, you don’t need to do anything)
- The government Age Pension (or other types of government payments)
- Pensions received from foreign funds.
What happens if you go over the transfer balance cap?
If you transfer more than your personal cap amount, you’ll generally pay 15% tax from the day you go over the cap (or up to 30% if you’ve gone over the cap before) rather than 0% on the notional earnings.
Your options for taking the excess money out of your retirement income account differ depending on the type of account that you have:
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I have a Flexi Pension account
The Australian Taxation Office (ATO) will send you a notice to take the excess money out of your account by a certain date to avoid going over the cap. You can either withdraw it or transfer it to a super account.
How to make a withdrawal
You can make a withdrawal from your Flexi Pension account by logging in to your account or completing the Flexi Pension withdrawal form (PDF, 548 KB) and return it to us.
How to transfer to a super account
If you don’t have a super account, we’ll open a new Accumulation 1 account for you. Simply complete the Transfer your Flexi Pension to a super account application form (PDF, 553 KB) and return it to us.
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I have a lifetime income stream
Your lifetime income stream is classified as a ‘capped defined benefit income stream’ and has a ‘special value’ that’s assessed against your personal transfer balance cap. The special value is calculated using a government-defined formula, usually your annual income multiplied by 16.
If your special value exceeds your personal cap amount, you won’t have an excess transfer balance. However, if you’re aged 60 or over, 50% of the income you receive from your lifetime income stream above the defined benefit income cap (which is $118,750 for the 2023-24 financial year) will be included in your assessable income, and you may pay income tax on it.
We’re generally required to withhold some tax from your income payments to meet pay as you go (PAYG) requirements.
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I have a Flexi Pension and a lifetime income stream
If you have a Flexi Pension and a lifetime income stream, you’ll have to ensure that your combined balance is under the cap and you’ll need to withdraw or transfer any excess amount from your Flexi Pension.
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The information is of a general nature and doesn't consider your personal circumstances. Before making decisions, you should consider whether the information is appropriate for your circumstances otherwise seek financial advice.