Re-balancing your super

The introduction of the $1.6 million transfer balance cap (TBC) and clarification by the Taxation Office surrounding the ‘cashing’ of death benefits are two things that have recently highlighted the importance of balancing superannuation benefits between couples.

Why? Because previously when a member died, the entire death benefit amount would normally have reverted to their spouse who would keep the amount in superannuation as a death benefit pension. As a result of the introduction of the TBC, should the value of pensions already measured against their transfer balance cap plus the value of any death benefit pensions exceed their transfer balance cap, any death benefit amount must be ‘cashed’ out of the superannuation system as a death benefit lump sum.

So, what benefits can be gained through equalising member benefit accounts?


Equal use of the TBC

Having $3.2 million of tax-free assets in superannuation is a target worth striving for and re-balancing accounts between spouses can help achieve this target as well as save you significant amounts of income tax.

The example below, provided by Yvonne Chu, Head of Technical Services at Australian Unity to the Self Managed Superannuation Fund Association 2019 National Conference, highlights the significant difference that equalising account balances can make over a substantial period of time.

Estate Planning

It is important to remember that death benefit income streams (such as reversionary pensions) count towards the recipient’s TBC and that any benefits that exceed that cap must be paid as a lump sum death benefit. One way to avoid this is if the surviving spouse can commute their own pension account, up to $1.6 million, back to accumulation phase.

A full or partial commutation of the surviving spouse’s pension account will give rise to a ‘debit’ of the Transfer Balance Account which in turn frees up the cap space required for them to receive a death benefit pension. This means the trustee can:

  • Maximise the amount of benefits remaining in the concessionally taxed (15%) super environment; and
  • Minimise the death benefits that must be paid to the beneficiary as a lump sum.


These are just a couple of example of benefits to be gained from re-balancing accounts. However, there may be further benefits such as:

  • Increasing the tax-free portion of a superannuation interest;
  • Getting a member’s balance below certain superannuation thresholds (eg. providing the ability to make non-concessional contributions); and
  • Access to the Age Pension in certain circumstances.


There are also a number of strategies that may be available to assist in re-balancing your member accounts:

  • Targeted withdrawal and re-contribution;
  • Spousal contribution splitting;
  • Concessional catch-up contributions; and
  • Small business CGT retirement exemptions.


If you are interested in accessing the benefits that re-balancing your member accounts can bring, please contact Scott Maroske or Tim Bate of our office to discuss what strategy would best suit you.



McConachie Stedman Financial Planning is an Authorised Representative of Wealth Management Matters Pty Ltd | ABN 34 612 767 807 | AFSL 491619