General transfer balance cap will be indexed on 1 July 2025
Due to recent increases in the Consumer Price Index (CPI), the general transfer balance cap (TBC) will increase by $100,000 from $1.9 million to $2 million on 1 July 2025.
The general TBC is a limit on the total amount of superannuation that can be transferred from the accumulation phase into the retirement
phase, to be paid as a pension. When it commenced on 1 July 2017, the cap was $1.6 million, but due to indexation since that time it
has now risen to $2 million.
Personal TBC
Note that although the general TBC will increase to $2 million, each individual will have a personal TBC, which may not be
the same as the general TBC.
Individuals starting a pension for the first time on or after 1 July 2025 will be entitled to a personal TBC of $2 million. However, those who have already started a pension before 1 July 2025 will have a different personal TBC, depending on how much has been transferred into retirement phase, and when.
The calculation of an individual’s personal TBC can be complex, but as an example, if Tom started a pension on 1 July 2024 for $950,000 (half of the then cap of $1.9 million), then he would be entitled to half of the indexation that will apply from 1 July 2025, or $50,000. Tom’s personal TBC will therefore be $1,950,000 from 1 July 2025.
The ATO calculates an individual's personal TBC based on the information reported to and processed by the ATO. The ATO encourages
funds to report all 'TBC events' when they occur and as early as possible, so that the personal TBC can be determined as quickly and as
accurately as possible. Those TBC events include starting a new retirement phase pension, or partially or completely commuting (or
stopping) a pension.
Other implications
The general TBC cap is also linked to eligibility to make non-concessional contributions. Therefore, from 1 July 2025, if a person’s
total super balance (the total amount they have in super across all funds, and whether in accumulation accounts or pension accounts) is less
than $2 million, they will have a non-concessional contribution cap of $120,000. Before 1 July 2025, your total super balance had to be
less than $1.9 million in order to be able to make non-concessional contributions within that $120,000 cap.
If you have any questions about your personal transfer balance cap or your ability to make non-concessional contributions, please contact our Super Team on 1300 363 866.
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General Advice Warning
The information provided in this article is for general information purposes only and is not intended to and does not constitute formal
taxation, financial or accounting advice. McConachie Stedman does not give any guarantee, warranty or make any representation that the
information is fit for a particular purpose. As such, you should not make any investment or other financial decision in reliance upon the
information set out in this correspondence and should seek professional advice on the financial, legal and taxation implications before
making any such decisions.