The superannuation transfer balance cap is changing. Here’s what you need to know

Published on: May 23rd, 2023


  • The General Transfer Balance Cap (TBC) is set to be indexed to $1.9 million from 1 July 2023.
  • Not everyone will receive the full increase.
  • Your personal transfer balance cap is determined by how much of the cap you have used when you commenced retirement phase income streams.
  • If you are retiring soon, it may make sense to wait until 1 July 2023 to enjoy the benefit of the indexation.

Each year, superannuation balance transfer caps are reviewed and indexed in line with increase in CPI. This year, with rising inflation, the General Transfer Balance Cap (TBC) is set to increase from $1.7 million to $1.9 million from 1 July 2023.

What is the superannuation transfer balance cap (TBC)?

The TBC refers to the amount of money a person can transfer from their superannuation accumulation account to the retirement phase where the earnings and any realised capital gains on assets supporting the pension are tax free.

It’s important to note, however, that not everyone has the same transfer balance cap. Your personal transfer balance cap depends on the General TBC when you first commenced retirement phase income streams. The scheme was first introduced in July 2017 at a cap of $1.6 million and subsequently indexed to $1.7 million on 1 July 2021.

Every year it is indexed against inflation and will change accordingly. But those who already commenced their retirement phase before 1 July of a given year will only receive a proportional amount of any increases. This means the personal transfer balance cap of those who retired before 1 July 2023 will sit between $1.6 – $1.7 million. But for those set to retire and commence their retirement phase income stream after this date, it will be set to $1.9 million.

Any amounts above the personal transfer balance cap can be retained in accumulation phase, where earnings and any realised capital gains will be taxed at 15%.

What it means for your superannuation strategy

How you manage your superannuation really depends on your individual circumstances and goals, and so first and foremost, you should speak to your adviser about what this means for you. However, generally speaking, there are a few things retirees and those nearing retirement can consider.

Firstly, if you are set to retire prior to 1 July, you may want to consider whether you hold off commencing a retirement phase income stream until the higher transfer amount is available to you as this will maximise your personal transfer balance cap rate.

If you have already had a transfer balance account and are planning to make a further transfer into a retirement phase pension, you should speak to your adviser to review the amount of indexation you are entitled to. Those who have met or exceeded their cap prior to 1 July will not be entitled to indexation.

Secondly, you may consider strategies to equalise your total super balance as a couple to maximise the amount you can transfer into retirement phase. Strategies can include “withdrawal and recontribution to spouse” and “concessional contribution splitting”.

Thirdly, given that the Total Super Balance will also increase to $1.9 million, you should speak to your adviser to review any new opportunities for non-concessional contributions, Government co-contribution and the spouse contribution tax offset.

What should you do?

Whether you are planning your retirement or in the throes of it, it’s a good idea to speak to your adviser before the legislation change comes in. For some, it won’t have any impact. However, for others, it could make a significant difference to your tax liabilities and, ultimately, the income you have in retirement, so it’s important to develop a personal strategy.

General Advice warning

The information provided in this blog does not constitute financial product advice. The information is of a general nature only and does not take into account your individual objectives, financial situation or needs. It should not be used, relied upon, or treated as a substitute for specific professional advice. Apt Wealth Partners (AFSL and ACL 436121 ABN 49 159 583 847) and Apt Wealth Home Loans (powered by Smartline ACL 385325) recommends that you obtain professional advice before making any decision in relation to your particular requirements or circumstances.