Q&A: Is there a cap on total super balance when you have started a pension?

So, no there are no real limits imposed on the total balances that can be held inside your fund. Now, the proposal that I referred to before was floated by the Labour government about putting in place a total superannuation saving limit. It was a discussion paper; it was an idea. They initially proposed, I think it was approximately $5 million, but that never came in. The proposed change to apply a total super-saving limit never came in.

What they did instead was put in place the new rules from 1 July 2025 around the additional tax on earnings when balances are above $3 million, referred to as Division 296 tax. That doesn’t start until 1 July 2025. Again, no limits imposed on your total balances.

There are, of course, limits imposed on what we can hold in the retirement phase of super. The phase of super, the pension phase, where all the earnings on those assets in pension phase are tax-free, and that’s referred to as the transfer balance cap. That sits somewhere between $1.6 and $1.9 million, depending on your own personal circumstances. Again, no limit on balances, but as you’ll see here, a limit on the amount that can be held in the tax-free retirement phase. The other thing we need to talk about, as I said before, were those 1 July 2025 changes, which apply an additional 15% tax on earnings that relate to member balances above $3 million. Again, only from 1 July 2025 and referred to as Div 296 tax. It’s just something another limit to be aware of.

There are further limits imposed on making non-concessional contributions. These are your after-tax contributions to super. Once your total super balance, which is looked at the prior 30th of June, once that balance is above the general transfer balance cap, you’re restricted to making non-concessional contributions. You’re restricted to add further after-tax contributions. Any after-tax contribution or non-concessional contribution you make when your total super balance is not below that general transfer balance cap, that will be deemed to be an excess contribution. Again, not a restriction on how much we can hold, but a restriction on getting more money in to our funders after tax contributions.

The other thing we need to keep in mind is the restriction on making those types of contributions once we reach 75. Once we reach 75 plus 28 days, we can’t make non-concessional contributions.

To cut a long story short, there are no actual restrictions imposed on how much you can hold in your super savings, but there are certainly limits on the tax benefits and limits around making further contributions once we hit some of those balanced benchmarks.

You can look at some of our articles on this topic on our website.