From 1 July 2025, the Transfer Balance Cap (TBC) increased from $1.9 million to $2 million. If you're approaching retirement or already in pension phase, this is worth understanding — because it determines how much of your super can sit in the most tax-friendly spot of all.

What Is the Transfer Balance Cap?

The TBC is the maximum amount of superannuation you can move into the retirement phase (also called pension phase) — the zone where your fund pays zero tax on earnings.

Money in accumulation phase (building up while you're working) is taxed at 15% on earnings. But once you retire and start drawing a pension, the fund's earnings on that money become tax-exempt.

The cap exists to limit how much can enjoy that full tax exemption. As of 1 July 2025, that limit is $2 million per person.

Why the Timing of When You Start Your Pension Matters

The TBC is personal and permanent — meaning once you start drawing a retirement phase income stream, your personal cap is locked in at whatever the general cap was at that point.

Here's why that matters:

  • If you started a pension before 1 July 2025, your personal TBC was set at $1.9 million (or lower, depending on exactly when you started).
  • If you're starting your first retirement phase income stream from 1 July 2025 onwards, you lock in the full $2 million cap.

You can't go back and claim a higher cap after the fact. So if you're planning to start a pension, the timing is worth thinking about.

What Happens If You've Already Used Part of Your Cap?

The ATO tracks your TBC usage through what's called a Transfer Balance Account. Every dollar you move into pension phase is recorded, and if you later commute (stop) a pension, you get credit back for that amount.

It's worth checking your Transfer Balance Account in MyGov if you're unsure where you stand: ATO → Super → Information → Transfer balance account.

The Simple Version

If you're approaching retirement and thinking about when to start drawing a pension, the TBC jump to $2 million from 1 July 2025 means new retirees can now shelter more money in the tax-free zone than ever before. That's genuinely good news.

If you're already in pension phase, it's worth reviewing your Transfer Balance Account to make sure everything's tracking correctly — especially if you've made changes like commuting a pension or rolling money between funds.

Thinking about when to start your pension? Let's talk through the timing.

Talk to Joy

This post contains general information only and is not financial advice. Transfer balance cap rules are complex and individual circumstances vary significantly. Speak with your SMSF accountant or a qualified financial adviser about your specific situation.