Pensions – Retirement Phase
Transfer balance cap – why you will have a personal cap
The transfer balance cap (TBC), as the name suggests, limits how much money you can transfer into a tax-free retirement account. From 1 July 2021, the general TBC will increase from $1.6m to $1.7m but not everyone will benefit from the increase.
From 1 July 2021, there will not be a single cap that applies to everyone. Instead, every individual will have their own personal TBC of between $1.6 and $1.7 million, depending on their circumstances.
If your superannuation is in accumulation phase before 1 July 2021, that is, you have not started taking an income stream (pension), then your cap will be the fully indexed amount of $1.7m.
However, if you have started taking an income stream – you have retired or are transitioning to retirement – then your indexed TBC will be calculated proportionately based on the highest ever balance of your account between 1 July 2017 and 30 June 2021. The closer your account is to the $1.6m cap, the less impact indexation will have. For anyone who reached the $1.6m cap at any time between 1 July 2017 and 30 June 2021, indexation will not apply and your cap will continue to be $1.6m. For example, if you are transitioning to retirement and drawing a pension, and your highest ever balance in your retirement account was $1.2m, then indexation only applies to $400,000 (the $1.6m cap less your highest very balance). In this case, your new personal TBC will be $1,625,000 after indexation.
| My super is… | TBC to 30 June 2021 | TBC from 1 July 2021 |
| In accumulation phase | $1.6m | $1.7m |
| In retirement phase and I reached the $1.6m cap limit between 1 July 2017 and 30 June 2021 | $1.6m | $1.6m |
| In retirement phase and I have never reached the $1.6m cap limit at any time between 1 July 2017 and 30 June 2021 | $1.6m | $1.6m plus indexation on the amount between your highest ever balance and the $1.6m cap. |
The Australian Taxation Office (ATO) will calculate your personal TBC based on the information lodged with them (this will be available from your myGov account linked to the ATO). If your superannuation is in retirement phase, it will be very important to ensure that your Transfer Balance Account compliance obligations are up to date. For Self-Managed Superannuation Funds (SMSFs), it is essential that you let us know about any changes that impact on your transfer balance account, for example if a member of your fund retires.
The total super balance caps to utilise the spouse contribution offset and the government co-contribution will also be lifted to $1.7m in line with indexation.
Minimum superannuation drawdown rates
The Government has announced an extension of the temporary reduction in superannuation minimum drawdown rates for a further year until 30 June 2022.
| Age | Default minimum drawdown rates | 2019-20, 2020-21 & 2021-22 reduced rates |
| Under 65 | 4% | 2% |
| 65-74 | 5% | 2.5% |
| 75-79 | 6% | 3% |
| 80-84 | 7% | 3.5% |
| 85-89 | 9% | 4.5% |
| 90-94 | 11% | 5.5% |
| 95 or more | 14% | 7% |
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