Q&A: Can I benefit from the increased transfer balance cap if I’ve already started a pension?

Q1: I started a pension with $1.7 million on 1 July 2022. Can I move a further $200,000 into pension phase from 1 July 2023 post indexation?

Q2: At June 2022 I had a total balance of $1.9 million. I have established a pension of $1.7 million. The combined SMSF has increased in value to $2.4 million and I have also started withdrawing pension payments of $10,000 per month. I understand that if I make a lump sum withdrawal my transfer balance decreases by that amount. If I don’t remove any lump sums does the transfer balance cap remain at $1.7 million regardless of the amount of pension payments?

A: This is a question, again, that we got repeated a lot when this webinar was put out. And it’s all, for instance, around the transfer balance account or transfer balance cap. It’s a question, that we get because it’s the rules that apply to the transfer balance cap affect all of us. It’s a lifetime limit, essentially, on what we can move into pension phase. But it’s how these rules apply, and especially around indexation, that can create vastly different outcomes for each of us. So even though we’ve got this general transfer balance cap of $1.7 million, soon to be essentially $1.9 million on indexation. The way it actually applies individually to us can differ considerably. And we’ll look at that shortly by going through some examples. I’ll take you through the rules and how they apply, but then I’ll take you through how they apply under different examples and scenarios.