Transfer Balance Cap explained

The transfer balance cap (TBC) is the limit on how much super you can transfer into a tax-free retirement-phase income stream, such as an account-based pension. From 1 July 2026, the general transfer balance cap is $2.1 million, up from $2.0 million in 2025–26.  

If you're approaching retirement — or already drawing a pension — this is the number that decides how much of your super can sit in the tax-free retirement phase.

This guide explains:

• what the cap is,
• what changed on 1 July 2026,  
• the important difference between the general cap and your personal cap, 
• how proportional indexation works (with a worked example), 
• what happens if your balance exceeds your cap, and
• the separate defined benefit income cap. 

The transfer balance cap (TBC) is a lifetime limit on the total amount of super you can move into the retirement phase, where investment earnings are generally tax-free. It applies per person, not per account, and it covers retirement-phase income streams such as account-based pensions.

It's important to understand what the cap does and doesn't limit. 

Amounts above your cap can stay in the accumulation phase, where earnings are taxed at 15% rather than being tax-free.

On 1 July 2026, the general transfer balance cap increased from $2.0 million to $2.1 million. This is the headline figure most people mean when they ask, “What is the transfer balance cap for 2026–27?”

The general cap increased by $100,000 in 2026–27 to keep pace with inflation. But it’s important to note that this is the published, universal transfer balance cap number. As the next section explains, the precise cap that applies to you personally may be different.

The transfer balance cap is indexed — it rises in line with the Consumer Price Index (CPI), in $100,000 increments. That's why it moves up periodically rather than every year. The 1 July 2026 increase to $2.1 million is the result of that indexation. 

This is the single most important distinction, and the one many people find confusing.

The general transfer balance cap is the published, universal figure — $2.1 million from 1 July 2026. 

It's the number you'll see quoted in the media and on the ATO website. It applies in full to anyone who starts their first retirement-phase income stream on or after this date.

Your personal transfer balance cap is the limit that actually applies to you, based on your own history. 

If you start your first retirement-phase income stream on or after 1 July 2026, your personal cap is the full $2.1 million. 

But if you've already moved some super into the retirement phase before then, your personal cap is worked out differently — through proportional indexation (to be explained next). 

You can see your own personal transfer balance cap via ATO online services in your myGov account; updated personal caps reflecting the 1 July 2026 indexation are expected to display within a few weeks of the start of each financial year.

Proportional indexation means that if you've already used part of your transfer balance cap, indexation only applies to the unused part. 

It means you won’t get the full $100,000 increase — rather, you’ll get a proportional share of it based on how much of your cap you haven’t used. 

If you've never moved any super into the retirement phase, you've never used your cap. That means you get the full general cap — so from 1 July 2026, your personal transfer balance cap is $2.1 million.  

If you've already started a retirement-phase income stream, the ATO tracks the highest balance you've ever had against your cap. 

Indexation applies only to the proportion of your cap you've never used. The bigger the proportion of your cap you've already used, the smaller your indexation increase; if you've fully used your cap previously, you get no increase at all. 

Lucy started a retirement-phase income stream in an earlier year and, at her highest, had used part — but not all — of her cap at the time. 

Because she has unused cap space, she receives indexation on only that unused portion — a proportional share of the $100,000 increase, not the full amount. 

The personal transfer balance cap that apples to you will appear in your myGov account in the ATO’s online services from around 13 July 2026. 

Note: Because personal caps depend on your individual history, the most reliable way to find your personal TBC is to check your myGov account. The general $2.1 million figure is the starting point, not necessarily your cap. 

If the amount you move into the retirement phase is more than your personal cap, you have an excess transfer balance. 

You'll generally be required to remove the excess out of the retirement phase — either back into the accumulation phase or out of super — and you may have excess transfer balance tax applied to the notional earnings on that excess. 

Exceeding the cap doesn't mean you've contributed 'too much' super overall — it means too much has been moved into the tax-free retirement phase. 

The fix is usually to keep the excess in the accumulation phase, where earnings are taxed 15% rather than at your marginal tax rate. 

This is also why your overall super amount can be higher than the cap: the limit applies to the amount you can transfer into a super pension after you have met a condition of release, such as retirement, not on your overall balance. 

If you receive income from certain defined benefit pensions — common in some older corporate and public-sector funds — a separate defined benefit income cap applies instead of the standard transfer balance cap mechanism, because these pensions can't simply be commuted to a lump sum. 

From 1 July 2026, the defined benefit income cap is $131,250, up from $125,000 in 2025–26.

The defined benefit income cap affects how much of your defined benefit pension income is taxed concessionally. If you receive a defined benefit pension, check how this cap applies to your specific arrangement. 

The general transfer balance cap doesn't only apply to the balance of your super that may be transferred to a super pension in retirement. It also flows through to the total superannuation balance thresholds — the figure the ATO uses, measured at 30 June each year, to determine your eligibility for a range of contribution rules.

Your total superannuation balance can affect:

• your eligibility to make non-concessional (after-tax) contributions;
• whether you can use the bring-forward arrangement for non-concessional contributions;
• your ability to use carry-forward (catch-up) concessional contributions;
• eligibility for the spouse contribution tax offset; and
• eligibility for the government co-contribution.

Because these thresholds move when the cap is indexed, the 1 July 2026 change can affect more than just your retirement phase — it can change what contributions you're eligible to make. The super contribution caps and types change from time to time, and you may wish to confirm current thresholds with the ATO before acting. 

The table below summarises the key figures for the years specified.  

Source: Transfer balance cap, ATO.