Is there a cap on total super balance when you have started a pension?

https://www.youtube.com/watch?v=XDGpwByx8yI 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. So, no there are no real limits imposed on the total balances that can be held inside your fund. Now, the proposal that I referred to before was floated by the Labour government about putting in place a total superannuation saving limit. It was a discussion paper; it was an idea. They initially proposed, I think it was approximately $5 million, but that never came in. The proposed change to apply a total super-saving limit never came in. What they did instead was put in place the new rules from 1 July 2025 around the additional tax on earnings when balances are above $3 million, referred to as Division 296 tax. That doesn’t start until 1 July 2025. Again, no limits imposed on your total balances. Learn more about the proposed Division 296 tax . Learn more about the proposed Division 296 tax . There are, of course, limits imposed on what we can hold in the retirement phase of super. The phase of super, the pension phase, where all the earnings on those assets in pension phase are tax-free, and that’s referred to as the transfer balance cap. That sits somewhere between $1.6 and $1.9 million, depending on your own personal circumstances. Again, no limit on balances, but as you’ll see here, a limit on the amount that can be held in the tax-free retirement phase. The other thing we need to talk about, as I said before, were those 1 July 2025 changes, which apply an additional 15% tax on earnings that relate to member balances above $3 million. Again, only from 1 July 2025 and referred to as Div 296 tax. It’s just something another limit to be aware of. There are further limits imposed on making non-concessional contributions. These are your after-tax contributions to super. Once your total super balance, which is looked at the prior 30th of June, once that balance is above the general transfer balance cap, you’re restricted to making non-concessional contributions. You’re restricted to add further after-tax contributions. Any after-tax contribution or non-concessional contribution you make when your total super balance is not below that general transfer balance cap, that will be deemed to be an excess contribution. Again, not a restriction on how much we can hold, but a restriction on getting more money in to our funders after tax contributions. The other thing we need to keep in mind is the restriction on making those types of contributions once we reach 75. Once we reach 75 plus 28 days, we can’t make non-concessional contributions. To cut a long story short, there are no actual restrictions imposed on how much you can hold in your super savings, but there are certainly limits on the tax benefits and limits around making further contributions once we hit some of those balanced benchmarks. You can look at some of our articles on this topic on our website.

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

https://www.youtube.com/watch?v=LT-66PAZuRw 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. It is the confusing terminology which is used. Let’s look at these. Remember that our total super balance refers to all balances held in all our super funds. Whether it be in accumulation phase or pension phase, it’s a balance representing everything that you have inside superannuation. It’s used to determine your eligibility to make contributions. It’s used to determine your eligibility to make use of the three-year non-concessional contribution. It’s there to determine your eligibility for the unused concessional contribution rules. The total balance is a measure that looks at your eligibility to do other things, to make contributions, etc. That’s different to your transfer balance cap. That’s the limit you’re referred to about moving money into pension phase, into that tax-free retirement phase. Now, the transfer balance cap only limits what we can use to start, to commence a pension. Once we’ve started a pension, those pensions can grow. They can increase in value, and sometimes well above that transfer balance cap. Currently, the $1.9 million, it’s grown from the $1.7 million to the $1.9 million. In some cases, you’ll see pensions which have balances well above that. If we go back to your specific query, which it says on the ATO website, it says that if your total super balance is below a certain level, you can put in contributions. We’re looking here at your eligibility to make contributions is based on your total super balance. The transfer balance cap is the limit imposed on what we then move from contribution phase, from accumulation phase, into retirement phase. That’s the limit we spoke about of the current $1.9 million. But again, the limit is imposed on what we can move into pension phase. Those pensions can grow. If we summarise that or look at that in a different way, there aren’t any real limits imposed on the total balances that can be held in your super savings. That total super balance restriction is on putting money if you have maximised your contributions, you can’t put more money in because of the total balance, it doesn’t stop you from then having growth in your balances. In fact, in 2022, it was reported that the largest balance held in the self-managed fund was above $540 million. It doesn’t restrict your balances. It’s restricting you from doing certain things. We then looked at the limits imposed on moving balances into retirement phase, which we looked at around the transfer balance cap. That currently sits anywhere between that $1.6 million and $1.9 million. Now, again, keep in mind that from 1 July 2025, we’ve got that change, that division 296 coming in, which is going to apply tax a bit differently if you’ve got more than $3 million inside super. It just applies an additional 15% tax on earnings relevant to your balances above $3 million. I want to be clear here that the ATO’s comments aren’t necessarily a loophole, but what they’re saying is if you’ve got close to those limits, you need to think about how much you can put into superannuation. But once that money is in your pension, once you’ve moved money from the accumulation phase into pension phase, those pension balances can grow and grow and grow, and they can grow well above the transfer balance account balance. They can go well above that $1.9 million. Earnings and losses on a pension don’t affect your transfer balance account. The transfer balance cap only limits what you can move or commence a pension with. Again, it’s not really a loophole. It’s just the way that the legislation works and those different terminologies need to be applied. Have a look at those three articles on the page there around transfer balance cap, total balance, and then the difference between the two of them. There are three separate articles which will certainly help you with that particular topic. I hope that helps. It is a bit confusing, but to summarise that, there’s no real loophole. It’s the way you’re looking at what you’re doing, making a contribution versus then moving money into pension phase. Again, I hope that helped.

Total super balance vs Transfer balance cap explained

In this guide

Total superannuation balance (TSB)
Super measures affected by your TSB
The transfer balance cap (TBC)
Common questions about total super balance and the transfer balance cap
The bottom line

Anybody who retired recently and started a super pension is probably familiar with the transfer balance cap and what it is. Yet there is still a lot of confusion around the differences between:

The total superannuation balance (TSB) which is the total balance a person has in super and is used to determine their eligibility for certain super measures, and
The transfer balance cap (TBC) which places a limit on the amount a person can transfer into tax-free retirement income streams.

Total superannuation balance (TSB)

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About the author

Kate Crawford

Kate has worked in the superannuation sector since 2003. Her experience ranges from customer service to financial advice, member education, complaints management, trustee services, and learning and development. She currently develops content and facilitates learning sessions for super professionals with the Association of Superannuation Funds (ASFA) as well as writing for SuperGuide.

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Total super balance vs Transfer balance cap explained

Total superannuation balance (TSB)

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