What is Transfer Balance Cap?
Quick answer
The Transfer Balance Cap (TBC) is the lifetime limit on the total amount of super you can move into a retirement-phase income stream, the tax-free pension environment, and for 2026-27 that limit is $2,100,000.
What the transfer balance cap actually limits
The TBC doesn't cap your total super balance. It caps how much can move from accumulation phase, where earnings are taxed at up to 15%, into a retirement-phase income stream, where earnings are tax-free. The ATO tracks this through a Transfer Balance Account (TBA), a running ledger that credits when you start a pension and debits when you commute money back out of it. It's a lifetime limit, and it applies across every fund you hold, not per-fund and not per-year.
You can only move money into retirement phase once you've reached your preservation age and met a condition of release, or started a Transition to Retirement income stream, so the TBC only becomes relevant once you're at that stage.
The current cap and how it's indexed
The general TBC for 2026-27 is $2,100,000, up from $2,000,000 the year before. It only indexes in $100,000 increments, and only once cumulative inflation (CPI growth) has built up enough to justify a step, so it doesn't move every single year.
| Financial year | General transfer balance cap |
|---|---|
| 2021-22 | $1,700,000 |
| 2022-23 | $1,700,000 |
| 2023-24 | $1,900,000 |
| 2024-25 | $1,900,000 |
| 2025-26 | $2,000,000 |
| 2026-27 | $2,100,000 |
Your personal cap can be lower than the general cap
The general cap is a ceiling, not necessarily your own number. If you'd already started a retirement-phase income stream before an indexation event, your personal cap only gets a proportional share of any increase, based on how much of your cap space was still unused at that point. Use 100% of your cap before an indexing event and you get 0% of the increase. Use 50% and you get 50% of the $100,000 increase, an extra $50,000. Start a retirement-phase income stream for the first time on or after 1 July 2025 and you get the full $2,000,000. Start fresh on or after 1 July 2026 and you'll get the full $2,100,000 instead.
What happens if you exceed your cap
Going over your personal cap doesn't tax the capital itself, it triggers excess transfer balance tax on the notional earnings attributable to the excess, calculated at the General Interest Charge (GIC) rate, compounding daily, currently working out to roughly 11 to 12% a year. The rate is 15% on a first breach and 30% on any later breach. You also have to commute the excess back out of retirement phase. If you don't act, the ATO issues an excess transfer balance determination, followed by a commutation authority forcing the excess out.
Say Priya retires on 1 July 2026 with $2,400,000 in super. She transfers exactly $2,100,000, her full personal cap, into retirement phase, and leaves the remaining $300,000 in accumulation, where it's taxed at up to 15% as normal. No excess tax applies. If she'd transferred $2,250,000 instead, that $150,000 excess starts accruing notional earnings at the GIC rate from day one. The ATO issues a determination, and she has to commute the $150,000 plus those notional earnings back to accumulation, and pay 15% tax on the notional earnings themselves.
Three things the transfer balance cap is often confused with
- It's different from your Total Super Balance (TSB). TSB is the total value across all your super interests and affects things like non-concessional contribution eligibility, the TBC only limits what moves into a tax-free retirement-phase pension.
- It's different from contribution caps. Contribution caps limit money going into super during accumulation, the TBC limits what moves out of accumulation into retirement phase.
- Commuting a pension back to accumulation doesn't refill your personal cap. Once cap space is used, it's gone, aside from a few limited exceptions around death benefit income streams.
Account-Based Pension: How It Works, Rules and Drawdown
The retirement-phase income stream this cap limits how much you can move into.
Spouse Super Contributions
The receiving spouse's Total Super Balance must sit below this cap to be eligible.
Frequently asked questions
Does the transfer balance cap apply to defined benefit pensions?
Yes, but it's assessed with a special formula rather than a simple dollar transfer, broadly your annual pension multiplied by 16, plus any lump sum component. It's worth getting advice if you're on a defined benefit pension approaching the cap.
What happens to super above the cap?
It's not forced out of super entirely, it just stays in accumulation phase, where earnings are taxed at up to 15% instead of tax-free. You can keep it there indefinitely.
Can I have more than one retirement-phase income stream?
Yes, across one or more funds. The combined value of all of them is tracked against your single personal transfer balance cap, it isn't a separate cap per income stream or per fund.
Does the transfer balance cap affect the Age Pension?
No, they're entirely separate systems. The transfer balance cap is an ATO rule about your super's tax-free retirement phase, the Age Pension is a Centrelink social security payment with its own income and assets tests.
Where can I check my own personal transfer balance cap?
Through myGov or the ATO's online services, under Super, then Information, then Transfer balance cap. It'll show your personal cap and how much of it you've already used.
Sources
Disclaimer
This is general information only, not financial advice. Transfer Balance Cap rules are complex, particularly around indexation, defined benefit pensions and excess transfer balance tax, speak with a licensed financial adviser before making decisions about retirement-phase income streams.