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Home / In retirement / Income from super / Q&A: Is there a cap on total super balance when you have started a pension?

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

Garth McNally
Garth McNally

Q: Is there a cap on the total balance (accumulation and income funds combined) one can have in super once one has set up an income stream pension? What is the rule for a 67-year-old?

A: This is an interesting question because we did have some proposed laws that were announced by the now Labor government, which I’ll take you through. But the key issue is to consider that there are no real limits imposed on the total balances that can be held in your super funds. There is no specific limit that says you can’t have any more than $5 million, $10 million, etc. inside superannuation. Just for interest sakes, in 2022, the largest balance held within a single SMSF was above $540 million. Now, I know you’re asking about individual limits, but no matter how many members there are in the SMSF, maximum of six, you’re looking at member balances of at least $100 million each.

About the author

Garth McNally
Garth McNally
Garth has worked in the Australian Superannuation industry for over 20 years with a specific focus on self-managed super funds. He provides ongoing support and training to individuals as well as to professionals working in the superannuation area, including advisers, accountants and lawyers. He is a regular contributor to industry publications and to the leading professional bodies including Chartered Accountants Australia & New Zealand (CA ANZ).
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Responses

  1. Mark Bradbury Avatar
    Mark Bradbury

    Hi Garth,
    I think that this answer may be a little misleading as the limits for transferring to a retirement benefit is between $1.6M and $1.9M however once that amount is transferred that amount can grow into significantly higher balances with good returns above the annual drawdown rates. Thus, the balance could build to $3M held in the tax free retirement benefit account.
    I got the impression from the answer that the pension account will be also limited ongoing for being tax free.
    Regards Mark

    1. SuperGuide Avatar
      SuperGuide

      Hi Mark,

      Thanks for your comment.

      Yes the balance in a pension account can grow beyond the transfer balance cap with investment returns.

      Minimum withdrawal requirements make it unlikely the total balance in a pension would grow beyond $3million, but it is certainly theoretically possible, particularly if the transfer balance cap is increased and the $3m threshold for division 296 tax remains the same.

      Best wishes

      The SuperGuide team

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