Super Transfer Balance Cap reaches $2m: what you need to know

The TBC is the maximum amount you can transfer from your super accumulation account into a tax-free super pension, such as an account-based pension. It prevents anyone from transferring an extremely large balance into a super pension and receiving tax-free earnings on the entire amount. 

Each person who has started a super pension has their own personal cap, which will be between $1.6 million and $2 million depending on when they started their first super pension, and how much of the cap they’ve already used.

The cap limits how much you can transfer to start a super pension, rather than the amount you can hold in super overall. Any excess can:

• Stay in accumulation phase, where it is generally taxed at up to 15%, or
• Be withdrawn, if eligible (subject to super rules and potential tax implications).

There’s no penalty for having a large accumulation balance. The key is to avoid exceeding your personal TBC when starting income streams.

The super pensions that count towards the TBC include all superannuation income streams, except:

• transition to retirement income streams, and
• deferred superannuation income streams that have not been converted to the retirement phase.

If you exceed your TBC, the Australian Taxation Office will require you to commute (roll back) the excess amount, as well as notional earnings on that amount, to the accumulation phase. You’ll also pay Excess Transfer Balance Tax of:

• 15% on notional earnings for a first breach, and
• 30% for subsequent breaches.

The sooner you act, the less tax you may have to pay.

Your transfer balance account tracks this using a credits and debits system: you get credits for starting pensions, and debits for any lump sums you withdraw from your account. However, any pension payments you receive don’t affect your cap.

Changes in your super pension account balance due to investment earnings, both positive and negative, do not affect your TBC. 

Therefore, if the balance of your account-based pension increases due to investment returns so that it is above your TBC, you will not be required to withdraw the excess.

If you have not used your entire TBC, the unused percentage can be used to calculate how much of the extra $100,000 that was added to the general TBC this year can be added to your personal TBC. 

Here’s how it works:

Audrey began an account-based pension with $1,000,000 in August. Her TBC at that time was $1,900,000.

Audrey’s personal TBC in the 2025-26 financial year is indexed as follows: 

1. Highest transfer balance: $1,000,000 
2. Used cap percentage based on TBC that applied in year of highest balance: $1,000,000 divided by $1,900,000 = 52.60% (rounded down to 52%) 
3. Unused cap percentage: 100% - 52% = 48% 
4. Indexation: $100,000 x 48% = $48,000 

That means Audrey’s personal TBC in 2025-26 has increased by $48,000 due to indexation to $1,948,000. 

As she has used $1,000,000, there is $948,000 of cap space remaining.

Anyone can view their personal TBC via the MyGov website.

If you’re the reversionary beneficiary, the value of the existing pension is added to your transfer balance account 12 months after your spouse’s death. This delay gives you time to plan.

If you receive a death benefit pension that isn’t reversionary, the credit is applied immediately when the new pension starts. In both cases, you’ll need to consider:

• your personal TBC (including any increase due to indexation),
• how much of it you’ve already used, and
• the value of the inherited pension.

Super caps and tax rules can be complex, so it’s always best to talk to an expert. 

If you have more questions about Transfer Balance Caps or your retirement plans, make a time for a free consultation with one of our trained guidance team members.

They can answer general questions about super and investments, and they can help you access financial advice that is tailored to your needs.