General Transfer Balance Cap Increasing from 1 July 2026

From 1 July 2026, the general transfer balance cap will increase from $2 million to $2.1 million. This change is being made because inflation for the year to December 2025 was high enough to trigger an automatic rise of $100,000 in the cap.

What Is the General Transfer Balance Cap?
The general transfer balance cap is a limit on how much of your superannuation can be moved into the retirement phase, where investment earnings, such as interest, dividends and capital gains, are tax‑free.

Any super you have above this limit stays in your accumulation phase, where earnings are taxed at 15%. Note that the government has also introduced into Parliament a new Division 296 tax, which will impose an additional tax of 15% on earnings on large superannuation balances (those over $3 million) and a further additional tax of 10% on very large superannuation balances (those over $10 million).  Both of these new taxes are applied to the proportion of a member’s balance over the relevant limits, and are levied on individuals, rather than the superannuation fund. This tax is expected to apply from 1 July 2027.

What the Change Means
A higher limit for people starting a pension after 1 July 2026
Anyone starting their first retirement‑phase income stream after this date will be able to start with up to $2.1 million, instead of $2 million.

Different outcomes for people already in pension phase
If you already have a retirement‑phase pension, your personal cap may increase, but not necessarily by the full $100,000. How much it increases depends on how much of your previous cap you’ve already used. People who have already used their full cap will not receive an increase.

Why the Cap Is Increasing
The cap is linked to the Consumer Price Index (CPI). As CPI rose by 3.8% in the year to December 2025, this was high enough to trigger the $100,000 increase.

Here’s a summary of key changes to the superannuation pension cap taking effect from 1 July 2026:

  • The tax‑free pension phase limit increases to $2.1 million.
  • New retirees can start a pension with more money in the tax‑free environment.
  • Existing pensioners may or may not receive an increase, this depends on their past usage of the cap.

Contribution caps are increasing too
Unlike the Transfer Balance Cap, contributions caps are indexed according to wages (AWOTE), rather than CPI. The relevant AWOTE figures were released on 26 February 2026, and as a result:

  • The concessional contributions cap will increase from $30,000 to $32,500
  • The non-concessional contributions cap will increase from $120,000 to $130,000

If you’re uncertain about how the upcoming changes to the Transfer Balance Cap and contributions caps could affect your retirement strategy, now’s the time to get expert guidance. Speak with our SMSF Specialists today to discuss your personal circumstances and ensure you’re making the most of the new rules.

Call us on 1300 363 866 or visit our Contact Us page.



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General Advice Warning
The information provided in this article is for general information purposes only and is not intended to and does not constitute formal taxation, financial or accounting advice. McConachie Stedman does not give any guarantee, warranty or make any representation that the information is fit for a particular purpose. As such, you should not make any investment or other financial decision in reliance upon the information set out in this correspondence and should seek professional advice on the financial, legal and taxation implications before making any such decisions.