Australia · Explainer

Personal transfer balance cap

The general cap is $2,100,000. Almost no client with an existing pension has that cap: they have a personal one, set by the proportion of their cap they had never used when each indexation landed. Here is the calculation, with the rounding step most explainers get wrong.

AU FY2026-27 Law Indexed 1 July 2026 Last reviewed 31 July 2026

General cap, personal cap

The general transfer balance cap is $2,100,000 from 1 July 2026. It is the figure a client who has never held a retirement-phase income stream will get when they first commence one — and it is the wrong figure for anyone who already has.

Every member who has ever had a transfer balance account has their own personal cap. Indexation is credited to them in proportion to the cap they had never used: a member who has used all of their cap receives none of the step, a member who has used none of it receives all of it, and everyone else lands somewhere in between. The practical consequence is that two clients commencing pensions in the same week can have caps hundreds of thousands of dollars apart.

Key figures

General transfer balance cap
$2,100,000
Transfer balance cap indexation step
$100,000

The calculation, step by step

  1. Find the highest ever balance. The high-water mark of the transfer balance account — not the current balance. Commutations since do not lower it.
  2. Divide it by the personal cap that applied on the first day it held that balance and express the result as a percentage, rounded down to a whole percent. For a member who had not been indexed before, that denominator is the general cap of the year they commenced.
  3. Take the unused percentage — one hundred less the used percentage.
  4. Apply it to the indexation step. The step on 1 July 2026 is $100,000, so the increase is that share of $100,000.
  5. Add it to the existing personal cap. The result is the client’s personal cap for 1 July 2026 onward. It never decreases, and it caps only what can be moved into retirement phase — not what the pension is worth afterwards.

The structure

increase = ( 100 − ⌊ highest ever balance ÷ cap at that time × 100 ⌋ ) ÷ 100 × $100,000

The floor brackets are the whole rule. Everything else is arithmetic.

General transfer balance cap by year

The denominator for a member who had not been indexed before is the general cap of the year they commenced. A client who started a pension in 2017-18 is measured against $1,600,000, not against today’s figure.

General transfer balance cap by financial year
Financial year General cap
2017-18 $1,600,000
2018-19 $1,600,000
2019-20 $1,600,000
2020-21 $1,600,000
2021-22 $1,700,000
2022-23 $1,700,000
2023-24 $1,900,000
2024-25 $1,900,000
2025-26 $2,000,000
2026-27 current year $2,100,000

Worked examples

Four positions, all computed by the calculator below.

Part of the cap used: $640,000 against a $1,600,000 cap

Used, truncated
40%
Unused
60%
60% of the $100,000 step
$60,000
Personal cap
$1,660,000

Well short of the general cap of $2,100,000 — and that gap never closes, because every future step is credited in the same proportion.

The rounding case: $1,600,000 against a $1,675,000 cap

Ratio, before truncation
95.522%
Used, truncated
95%
Unused
5%
Increase
$5,000

Rounded to the nearest percent this would read 96% used, 4% unused and $4,000 of increase — $1,000 short. The floor is not a presentational nicety.

Cap fully used: $1,900,000 against a $1,900,000 cap

Used
100%
Increase
$0
Personal cap
$1,900,000

Nil unused proportion, so nil indexation — this year and every year after it. The client’s cap is frozen at the figure it reached when the account was filled.

Never commenced

Cap at first commencement
$2,100,000

No account, no proportion, no history: the general cap applies in full. Which is also why deferring a first commencement across an indexation date is worth $100,000 of cap space to a client who would otherwise fill it.

Personal transfer balance cap calculator

Two figures decide the answer: the highest balance the transfer balance account has ever reached, and the personal cap that applied on the first day it held that balance. The third field is only needed where the personal cap has already been indexed since — leave it blank and the calculator uses the cap at the time.

A member with no transfer balance account has no proportion to preserve — the general cap applies in full when they first commence.

$640,000

$1,600,000

Blank — using the cap on the day the highest balance was held.

Personal transfer balance cap from 1 July 2026

$1,660,000

60% of the cap was never used, so 60% of the $100,000 step is credited — $60,000.

1. Highest ever balance
$640,000
2. Cap on the day it was first held
$1,600,000
3. Proportion used, before truncation
40.000%
4. Used, rounded down to a whole percent
40%
5. Unused proportion
60%
6. Unused proportion of the $100,000 step
$60,000
7. Cap it is added to
$1,600,000

Simplified illustration for education — not advice. The general cap is $2,100,000; a personal cap can sit anywhere between the cap at first commencement and that figure.

Practical points

  • Never quote the general cap to an existing pensioner. $2,100,000 is the cap for someone commencing now. For a client with an account, the personal figure is the only one that matters — and it is available from the ATO’s records rather than from arithmetic on the client’s statement.
  • Filling the cap forfeits every future step. A strategy that takes a client to 100% used buys retirement-phase space now and gives up all future indexation. Sizing a first commencement slightly under the cap keeps the proportion alive.
  • The cap is a gate, not a ceiling on the pension. It limits what can be transferred in. A pension that grows past the cap afterwards is not in breach, and a pension that falls does not free up space.
  • It gates contributions too. A total super balance at or above the general cap takes the non-concessional cap to nil — the connection between this page and the bring-forward tiers.
  • Death benefit pensions count. A reversionary or death benefit income stream is credited to the recipient’s own transfer balance account, so a surviving spouse’s personal cap is often the binding constraint in an estate strategy.

Questions we get asked

Is the used proportion rounded up or down?
Down, to a whole percent — always. A member at 95.522% used has used 95%, not 96%, so 5% of the cap is unused and $5,000 of the $100,000 step is credited. Rounding to nearest instead understates the increase by $1,000.
Which balance is the proportion measured against?
The highest balance the transfer balance account has ever reached, against the personal cap that applied on the first day it held that balance. Not the current balance, and not the balance at the indexation date — a member who has since commuted still carries the proportion set by the high-water mark.
What if the client has never commenced a retirement-phase income stream?
They have no transfer balance account, so there is no proportion to preserve. The general cap in force when they first commence applies in full — $2,100,000 for anyone commencing in FY2026-27.
Does a client who has ever been at their cap get any indexation?
No — and not in any later year either. A member whose account has ever reached 100% of their personal cap has a nil unused proportion, which is permanent. This is the case worth checking before recommending a commutation strategy that fills the cap.
Does commuting a pension restore cap space or change the personal cap?
A commutation creates a debit in the transfer balance account, which frees up room to make a later credit against the same personal cap. It does not increase the personal cap, and it does not reset the highest ever balance the indexation proportion is measured from.
Do market movements inside the pension affect the transfer balance account?
No. The account records credits and debits — commencements, commutations, certain structured settlement contributions — not investment earnings or pension payments. A pension that doubles in value does not move the account balance, and a pension drawn down to nothing does not create a debit.

Sources

Sourced from the references below. The general cap and the indexation step come from the same reference file as the rates and thresholds page.

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