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Home / Retirement planner / Retirement planning strategies / Q&A: Is there a loophole which allows a pension fund to go above the transfer balance cap?

Q&A: Is there a loophole which allows a pension fund to go above the transfer balance cap?

Garth McNallyGarth McNally

Q: I am interested in the apparent loophole that allows a pension fund to go above the applicable cap. In my case $1.7 million. On the ATO website it states that if your Total Super Balance on 30 June, the previous year is less than $1.48 million then non-concessional contributions for the first year can be $330,000. Thus, effectively making your new total super balance $1.81 million i.e. greater than the $1.7m cap. Can you explain any pitfalls in using this strategy to maximise funds in pension phase?

A: Remember, there’s a key difference between what we call our total super balance and what is referred to as our transfer balance cap. Although you refer to it as a loophole, it’s not really a loophole. It’s just the way that the legislations interact with each other.

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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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