On 1 July 2025, the amount that can be transferred to a tax-free retirement account will increase to $2m. Each year, advisers await the release of inflation statistics. The reason for the transfer balance cap is straightforward: it is associated with the Consumer Price Index (CPI), which is released each December. When inflation rises, the general transfer balance cap increases in increments of $100,000 at the beginning of the financial year. In December 2024, the inflation rate prompted an increase in the cap from $1.9 million to $2 million.
It’s important to note that each individual has their own transfer balance cap. If you have already started a retirement income stream, any future increases in the cap due to indexation will only apply to your unused portion of the transfer balance cap.
Considering Retiring in 2025?
If you are considering retiring, either partially or fully, indexation of the transfer balance cap offers a one-off opportunity to maximise the amount you can transfer to your tax-free retirement account. If you take a retirement income stream for the first time in June 2025, your transfer balance cap will be $1.9m, but if you wait until July 2025, your transfer balance cap will be $2m, an additional tax-free $100,000.
Already Taking a Pension?
If you are already taking a retirement income stream, indexation will apply to your unused balance cap, so you might not take advantage of the full $100,000 increase on 1 July 2025.
Where Can I See What My Cap is?
The value of your superannuation interests is reported by the superannuation fund to the ATO. You can view your personal transfer balance cap, available cap space, and transfer balance account transactions online using the ATO link in myGov. If you have an SMSF, your reporting obligations must be up to date.