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Superannuation: Indexation of Transfer Balance Cap

Date: 20 March 2025

You may have heard in the media about the increase of the Transfer Balance Cap (TBC) increasing from $1.9 million to $2 million from 1st July 2025.

What is a Transfer Balance Cap?

The general Transfer Balance Cap is the upper limit of money that can be transferred into retirement phase in superannuation, however this figure does not only impact clients who are at retirement age, it also dictates what a clients Total Superannuation Balance (TSB) needs to be less than to access the standard non-concessional contributions cap.

Why has it increased?

Originally starting at $1.6 million on 1st July 2017, it has been indexed twice before, to $1.7 million on 1st July 2021 & $1.9 million on 1st July 2023.

Whether it is indexed or not all depends on CPI, and with All Groups CPI reaching 139.4 for the December 2024 quarter, it was decided it would be raised to $2 million on 1st July 2025.

What does this practically mean?

This means that clients commencing their first pension from 1st July 2025, their Transfer Balance Cap will be $2 million, allowing them to put an extra $100,000 into retirement phase.

Clients who have commenced pensions in the past but have not fully utilised their personal transfer balance cap, will benefit from a smaller increase, as it is indexed proportionally based on the highest ever balance in retirement phase.

Clients who have fully utilised their transfer balance cap will unfortunately not get any benefit from this indexation.

For clients looking to make contributions, if your Total Superannuation Balance at 30 June in the preceding financial year is over the general Transfer Balance Cap, that makes you ineligible to make non-concessional contributions. With the increase on 1st July 2025, clients who may have been ineligible to make non-concessional contributions in prior years, may find themselves eligible again with the increase to $2 million. This is however, dependant upon your Total Superannuation Balance at 30 June 2025.

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To get in touch with our team, start by emailing us at enquiries@rm.net.au

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