292 Payneham Road, Payneham SA 5070

(08) 8362 0060

(08) 8362 0061


Super Reforms – Impact of $1.6 million pension transfer balance cap

Super Reforms – Impact of $1.6 million pension transfer balance cap

While the introduction of a .6 million pension transfer balance cap will not affect many Australians, key changes will need to be made if you are impacted.

The rules to ensure people don’t transfer more than $1.6 million from the ‘accumulation’ phase of super into the ‘retirement phase’ (otherwise known as a superannuation pension or income stream) are quite complex and beyond the scope of this booklet to explain in any detail.

There are, however, a few key things to keep in mind.

Few people will be impacted

The Government has indicated that less than 1% of Australia’s superannuation account holders will be affected by the transfer balance cap of $1.6 million 10. $1.6 million can provide a generous retirement income

A superannuation pension of $1.6 million could generate an annual income of:
1. around four times the level of the single age pension11, and
2. almost three times the ‘comfortable’ lifestyle standard identified by the Association of Superannuation Funds of Australia 10. Couples can have $3.2 million in pensions Up to $3.2 million may be transferred to pensions by a couple, as the $1.6 million pension transfer balance cap is a per person limit.

Contribution splitting could be a good strategy

Where one member of a couple holds the majority of the superannuation and that person has (or will) accumulate more than $1.6 million in super, splitting up to 85% of the previous financial year’s concessional contributions with their spouse who has less super could increase the combined amount that could be transferred into pensions.

Accumulation phase is still tax-effective

Amounts exceeding the $1.6 million transfer cap won’t have to be withdrawn from the super system. The excess amount can stay in the ‘accumulation’ phase where earnings are generally taxed at 15%, but in most cases the actual tax rate paid is a lot lower when deductible expenses, franking credits and other items are taken into account in the fund.

Seek advice

If you think you might be impacted by this measure, contact us on 0883620060. It is important to consider the changes as your super fund may be eligible for capital gains tax relief depending on steps you take prior to 1 July 2017.

Reforms at a glance

Key Opportunities

Implications for transition to retirement pensions

Impact of the $1.6 million pension transfer balance cap

Financial Advisor Adelaide

We are an award winning practice that has been providing financial advice to South Australians since 1969. We really enjoy getting to know our clients and building a relationship with them that lasts over many years. We have a diverse range of clients from mum and dad to AFL players to ASX CEOs. All of which have a diverse range of financial advice needs and very different relationships to maintain. Our clients describe a 'breath of fresh air', personable, expert and people with high integrity. Clients have also mentioned that they are not treated as a number and the advice is specific to them. Working with clients for clients.

Financial Planner Adelaide

The one most rewarding thing about being a financial planner in Adelaide is when you have been working collaboratively with a client in developing and building their goals and objectives and the come to fruition. This give both the clients and myself a real sense of achievement and to use the famous quote 'are we there yet?' and together we can say YES! There has never been a better time to look towards what you want to achieve and start a financial plan so you can get there too.

Financial Planning Adelaide

A person's financial story is like a jigsaw puzzle... "lots of pieces needing to be put into their correct places". A financial adviser can assist a client to put the pieces in the right places by having a series of simple conversations about where a they are currently situated, where they want to be and what strategies can assist them. Every client has a different financial story and goals. Each jigsaw puzzle will always be different. A good financial adviser is experienced at putting together a wide range of jigsaw puzzles. Helping a client put their own puzzle together and seeing their satisfaction is a wonderful feeling.

Barry Phillis, Chris Scriva, Paul Cetrangolo and Owl Financial Management Pty Ltd are Authorised Representatives of GWM Adviser Services Limited Australian Financial Services Licensee Registered Office at 105-153 Miller Street North Sydney NSW 2060 and a member of the National Australia group of companies.

GENERAL ADVICE WARNING: The advice on this site may not be suitable to you because it contains general advice that has not been tailored to your personal circumstances. Please seek personal financial advice prior to acting on this information.

Opinions constitute our judgment at the time of issue and are subject to change. Neither, the Licensee or any of the National Australia group of companies, nor their employees or directors give any warranty of accuracy, nor accept any responsibility for errors or omissions in this document. View Terms & Conditions >