How to take advantage of the increased transfer balance cap

22 March 2026

In this guide

Remind me, what is the TBC?
How does indexation work?
Other opportunities arising from indexation
Get more guides like this with a free account

On 1 July 2026, the general transfer balance cap (TBC) rises from $2 million to $2.1 million. The cap is indexed to increase in line with the Consumer Price Index (CPI) in increments of $100,000 and will continue to rise in the future, with each increase taking effect at the start of a new financial year.

Increases to the cap can create opportunities for people with high super balances to move more money into the tax-free retirement phase, make contributions and benefit from schemes such as the co-contribution.

The largest opportunity, and the most significant trap, applies to those who are considering starting their first super pension.

Remind me, what is the TBC?

In a nutshell, your TBC is the maximum amount you can transfer to a tax-free pension account.

For more on the TBC, see SuperGuide article transfer balance cap (TBC) for super pensions: How it works.

Good to know

When you start your first pension account, the ATO establishes a transfer balance account (TBA) to track your TBC. Your TBA is a record of all the ins and outs (credits and debits) that count towards your TBC.

How does indexation work?

Indexation has the following implications:

1. Individuals who have already used their whole TBC at any time in the past are not entitled to an indexation increase.

So, if you commenced an account-based pension on 1 July 2019 with $1.6 million (when the cap was $1.6 million), the indexation increase does not apply to you. Similarly, if you commence a pension in June 2026 with $2 million, indexation will not be applied.

2. Anyone starting a retirement income stream for the first time on or after 1 July 2026 will be entitled to the new TBC of $2.1 million.

Case study 1: Andrew

Andrew turned 60 on 1 March 2026. He planned to fully retire on his birthday and commence an account-based pension to withdraw tax-free income to support his living expenses.

His super balance was $2.2 million (in accumulation phase). If he commenced an account-based pension on 1 March 2025, he could have transferred a maximum of $2 million to retirement phase. The remaining $200,000 would have remained in accumulation phase where investment earnings would be taxed at up to 15% or could have been cashed as a lump sum and invested outside super, where earnings are taxed at marginal rates.

Andrew took advice and decided to wait until 1 July 2026 to commence an account-based pension with $2.1 million. This means that earnings on the $100,000 that would otherwise have remained in the accumulation phase or been invested outside super are now tax free. To fund his living expenses for three months (March to June 2026), he used assets outside super.

Good to know

Even with a lower super balance, waiting to start your first retirement phase pension until after the cap rises may prove beneficial, as it will grant you a higher personal TBC and access to increased proportional indexation of your personal cap in the future.

This can be utilised if you make further super contributions that you plan to convert to a retirement income stream, or if you inherit super after the death of your spouse, which you would like to keep in a pension.

Learn more about managing your super after the death of a spouse.

3. People who commenced a retirement income stream prior to 1 July 2026 and have not fully utilised their TBC will receive a proportionate increase in their personal TBC (but not the full $100,000 indexation).

In such a case, a pensioner’s ‘unused cap percentage’ of their TBC will be used to proportionately apply indexation.

Unused cap percentage is calculated by subtracting your used cap percentage from 100, where your used cap percentage is calculated as follows:

(used cap/TBC x 100) rounded down to the nearest whole number

The used cap is the highest ever value in your TBA, and TBC is your TBC at the earliest date of this highest value.

Hence, the increase in your TBC = unused cap percentage x $100,000 (the increase in the TBC due to indexation). The following example illustrates how this applies in real life.

Case study 2: Rita

Rita commenced an account-based pension of $1.8 million on 1 July 2025. She intends to make a downsizer contribution of $300,000 because she heard about the TBC increasing to $2.1 million and is selling her home. Rita assumes she will be able to use the full additional contribution to commence a further income stream after 1 July 2026.

However, because she already had an account-based pension prior to the indexation, her cap will not increase to $2.1 million to make space for her second pension. She is only entitled to proportional indexation.

Rita’s TBC on the date she first had the highest value in her transfer balance account was $2 million. Her unused cap is calculated:

$1.8 million / $2 million x 100 = 90

100 – 90 = 10% unused cap percentage

Rita is therefore entitled to 10% of the $100,000 indexation increment, or $10,000.

So, Rita’s new TBC is $2,010,000 ($2,000,000 + $10,000) from 1 July 2026. This means she can only transfer $20,000 more into retirement phase – her new cap less the amount she has already used to commence a pension. Rita cannot transfer the full $300,000 she planned to a pension without exceeding the cap.

Waiting until after 1 July to transfer more into the retirement phase will mean Rita can transfer $10,000 more than she could prior to 1 July.

You can track your TBC-related information through your myGov account, where you can see your transfer balance account and your current TBC. If you have already started a retirement income stream, your new (indexed) TBC will be published shortly after 1 July.

Other opportunities arising from indexation

Because the general TBC figure is also used to determine eligibility for other super measures, its indexation offers opportunities for those with a high super balance.

1. Non-concessional contributions and the co-contribution

To be eligible to make non-concessional contributions and to receive a co-contribution in a financial year, your total super balance on the prior 30 June must be below the general TBC for that year.

Even if your personal TBC is lower, you can make non-concessional contributions in 2026–27 if your total super balance is below $2.1 million on 30 June 2026.

2. Bring-forward arrangements

Bring-forward rules for non-concessional contributions are modified when your total super balance is close to the general TBC. Indexation of the cap and the simultaneous increase to the non-concessional contribution cap could significantly increase the amount of non-concessional contribution a person can make in 2026–27.

The table shows the bring-forward rules that apply in 2026–27 versus 2025–26. The figures apply when you are not already in an active bring-forward arrangement that was triggered in an earlier year.

Total super balance on 30 June 2025	Available contribution amount and bring-forward period in 2025–26	Total super balance on 30 June 2026	Available contribution amount and bring-forward period in 2026–27
Below $1.76m	$360,000 over 3 years	Below $1.84m	$390,000 over 3 years
From $1.76m to less than $1.88m	$240,000 over two years	From $1.84m to less than $1.97m	$260,000 over 2 years
$1.88m to less than $2m	$120,000. No bring forward, general non-concessional contributions cap applies	$1.97m to less than $2.1m	$130,000. No bring forward, general non-concessional cap applies
$2m or more	Nil	$2.1m or more	Nil

Case study 3: Harvey

Harvey had a total super balance of $2.01 million on 30 June 2025 and, as a result, was not eligible to make non-concessional contributions in 2025–26 because his total super balance on the prior 30 June was above the general transfer balance cap for that year.

On 30 June 2026, Harvey’s total super balance was $2.09 million. Harvey is able to contribute up to $130,000 non-concessionally in 2026–27.

3. Spouse contributions

The level of the TBC also determines a person’s eligibility to receive super contributions from their spouse, and for the contributing spouse to receive a spouse tax offset.

To be eligible for these measures, the spouse receiving the contribution must have a total super balance below the general TBC for the financial year the contribution is being made on 30 June of the prior financial year.

Get more guides like this with a free account

Get independent guidance and practical tools to help you stay on track in retirement, make more informed decisions and keep up with rule changes that affect you.

Create free account

Trusted by 5,000+ members · Independent · Ad-free

Prefer full access? See what’s included in membership.

IMPORTANT: All information on SuperGuide is general in nature only and does not take into account your personal objectives, financial situation or needs. You should consider whether any information on SuperGuide is appropriate to you before acting on it. If SuperGuide refers to a financial product you should obtain the relevant product disclosure statement (PDS) or seek personal financial advice before making any investment decisions. Comments provided by readers that may include information relating to tax, superannuation or other rules cannot be relied upon as advice. SuperGuide does not verify the information provided within comments from readers. Learn more