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The superannuation system was overhauled so that individuals could only have a maximum of $1.6m in a tax-free retirement or pension account from 1 July 2017. This limit is known as the transfer balance cap. Prior to this there was no limit to how much you could hold in a tax-free retirement account within your superannuation fund, resulting in individuals already holding more than $1.6m in pension phase needing to transfer excess amounts back into accumulation phase to remain compliant.
This can provide further opportunity for those individuals who have not utilised their full $1.6m cap to make additional contributions to superannuation. Alternatively, those thinking about commencing a retirement phase income stream (RPIS) from 1 July 2021 can look to increase the amount of their superannuation that is held in a tax-free account.
For individuals that have used some but not all of their TBC before 1 July 2021, your personal transfer balance cap will be proportionally indexed based on the highest ever balance of your transfer balance account.
For individuals who have already utilised their full $1.6m TBC they will not be entitled to further indexation.
If you are looking to implement a strategy to increase your superannuation balance or alternatively, you have a strategy that needs updating, please contact our superannuation team, or your relationship partner.
