From 1 July 2025, the general transfer balance cap—the maximum amount that can be moved into a tax-free retirement phase superannuation account—will increase from $1.9 million to $2 million.

What’s Driving the Increase?

The transfer balance cap is indexed in $100,000 increments, based on movements in the Consumer Price Index (CPI) released each December. In December 2024, inflation reached the level required to trigger the next round of indexation.

Why It Matters

The transfer balance cap determines how much of your super you can move into the retirement phase, where earnings are tax-free. Any amount above the cap must remain in the accumulation phase, where earnings are taxed at up to 15%.

Planning to Retire in 2025?

If you’re planning to retire around mid-2025, the timing of when you commence your retirement income stream could have a significant impact:

• Starting before 1 July 2025: Your personal transfer balance cap will be $1.9 million.

• Starting on or after 1 July 2025: Your cap will be $2 million—allowing you to transfer an additional $100,000 into a tax-free environment.

This timing consideration could provide a one-off opportunity to maximise the amount of super you hold in the retirement phase.

Already Receiving a Pension?

For those already drawing a retirement income stream, indexation is not automatic. Instead, the increase applies only to the unused portion of your personal transfer balance cap. So if your cap is already fully used, you won’t benefit from the full $100,000 increase.

How to Check Your Personal Cap

Your super fund reports your account details to the ATO, which maintains your Transfer Balance Account. You can check your personal cap, remaining cap space, and past transactions through your myGov account linked to the ATO.

If you manage a self-managed superannuation fund (SMSF), it’s crucial to ensure that all reporting to the ATO is accurate and up to date to avoid compliance issues or missed opportunities.