Every Australian entering retirement phase with superannuation benefits, now needs to monitor his or her very own retirement cap. Since 1 July 2017, the $1.6 million transfer balance cap represents the maximum amount that you can transfer to retirement phase to support a super pension. The transfer balance cap will be indexed periodically in $100,000 increments.
Note: For the 2017/2018 year and for the 2018/2019 year, the transfer balance cap is $1.6 million.
If you belong to a defined benefit super fund, then special rules apply to the measurement of super pensions in retirement phase, due to the unique nature of how defined benefit pensions are structured, and the difficulty (in most cases impossible) in commuting any defined benefit pension benefits that may exceed the transfer balance cap.
Note: If you’re seeking information on how the rules apply to the majority of Australians (holding account-based super pensions), see SuperGuide article Retirement phase: A super guide to the $1.6 million transfer balance cap.
Important: The special defined benefit pension rules outlined here, also apply to life expectancy and market-linked pensions as well (check with your provider about the mechanisms they have in place to assist you with complying with the $1.6 million transfer balance cap). You can also check out the ATO’s Law Companion Rulings on this issue (see SuperGuide article Latest super changes: ATO Guidance Notes and Law Companion Rulings).