Increase in Pension Transfer Balance Cap

From 1 July 2021, the amount that a member can transfer to a tax-free retirement pension will increase from $1.6 million to $1.7 million. On the surface this may sound like great news for super fund members because they will be able to transfer an extra $100,000 into the tax-free environment.

But there are a few important points to note:

  • There is no longer a single cap for everyone so the system will be quite complex and you need an accountant/administrator of your fund that ensures reports are lodged on a timely basis to the ATO. Click here to find out more
  • If you are already in pension mode and have used all of your $1.6m cap, you do not have access to any of the extra $100,000.
  • For anyone that has already started a retirement pension prior to 1 July 2021, you only have access to the unused portion of the cap at 1 July 2021


John started a retirement pension of $1.2 million at 1 July 2018 and has not commenced any new pensions since then.

$1.2 million is 75% of the current cap (of $1.6 million) meaning he has an unused portion of 25%.

This means he can use 25% of the new indexed cap being $25,000 making his transfer balance cap $1,625,000.

So in future he can start a new retirement pension with up to $425,000

  • The unused portion of the cap is the highest amount that your transfer balance account has been in the past and not necessarily what your cap is right now in some instances


Paul started a retirement pension for $1.6 million on 1 July 2017.

On 1 July 2019 he no longer wanted an income stream out of his fund and commuted it all back into accumulation. It has stayed that way until 1 July 2021.

So under this scenario you might think that you would have access to the full extra $100,000 indexed cap because you have used 0 in your cap at 1 July 2021?

That’s actually not correct. As your highest ever balance was $1.6 million, it means you have no unused portion and no access to the $100,000 increase.

You would still be able to start a pension of $1.6 million though


In some good news, from 1 July 2021, some members will be able to make non-concessional contributions again due to total super balance limit increasing to $1.7 million from $1.6 million


Paula had a total super balance (across all funds) of $1.634 million at 30 June 2020. Because her balance was over $1.6 million the 30 June prior, she was unable to make any non-concessional contributions for the 30 June 2021 year

12 months later at 30 June 2021, her total super balance was roughly the same amount ($1.64 million). Because the balance limit is $1.7 million for 30 June 2021, this means that Paula can make $100,000 of non-concessional contributions again for 30 June 2022 year.

Should you wish to discuss any of the points above, please contact our Superannuation Specialists on (03) 9835 8200.

About the Author
Nick Petaroudas
Nick joined Accru Melbourne in 2011 and has over 15 years’ experience working in the public practice servicing clients in business services. He is our Superannuation Specialist and prides himself on being a Technical Superannuation Expert.
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