Written by:
Jason Hurst
Technical Superannuation Adviser
Accurium
Following the release of the December 2025 quarterly CPI figures the general transfer balance cap (TBC) will increase from $2,000,000 to $2,100,000 from 1 July 2026. This could provide tax effective retirement pension and non concessional contribution opportunities for some of your clients.
Retirement Income Streams
Individuals who commence a retirement phase income stream for the first time after 1 July 2026 will have access to the full $2,100,000 limit. For some individuals there may be a benefit in deferring the commencement of a retirement income stream until on or after 1 July 2026.
Example 1:
Stephen aged 64 will be retiring in May 2026 and has a superannuation balance of $2,400,000. Should he commence an income stream at retirement he can move $2,000,000 to a tax-free retirement pension and will need to leave the remaining $400,000 in accumulation which is taxed at 15% on the earnings. If he waits until 1 July 2026 to start his pension, he can move $2,100,000 into a retirement phase pension.
Where the complexity lies with the transfer balance cap system is that clients who have commenced a retirement phase income stream prior to 1 July 2026 will have a personal TBC that is different to the general TBC of $2,100,000. This is because indexation only applies to the individuals unused TBC at its highest point.
Example 2:
Mary aged 68 commenced an account based pension on 1 August 2025 with $1,000,000. At that time the general TBC was $2,000,000. Because Mary has used 50% of the general TBC she will be entitled to 50% indexation on 1 July 2026 meaning her personal TBC will only increase by $50,000 and will be $2,050,000. If Mary had commenced her account based pension with $2,000,000, she would not receive any indexation and her personal TBC would remain at $2,000,000.
Based on the proportional indexation rules we face a situation where your clients may have a personal TBC anywhere between $1,600,000 and $2,100,000 (from 1 July 2026). Your client’s personal TBC and eligibility for indexation is shown on the ATO Portal and under their My Gov Login and this should be checked before commuting or commencing any retirement phase pensions.
The upper total super balance (TSB) limit to be able to make non concessional contributions (NCC) will also increase to $2,100,000 from 1 July 2026 which may provide some opportunities for clients. Contribution caps are indexed to the December 2025 average weekly ordinary times earnings (AWOTE) numbers which will be released in late February 2026.
If you would like to find out more about the transfer balance cap and the impact of indexation on your retiree clients, the SMSF Transfer Balance Cap: Reporting & 2026 Indexation webinar is running on 4 February 2026. You can register your team members from the link below.
