Carey Group SMSF Newsletter

Retirement Cap Increasing to $2 Million from 1 July 2025

A key change is coming for retirement planning. From 1 July 2025, the general transfer balance cap (also known as the retirement phase cap) will rise from $1.9 million to $2 million.

This update creates more room for strategic superannuation planning and opens opportunities to increase your tax-free income in retirement.

What Is the Transfer Balance Cap?

The transfer balance cap is the maximum amount of superannuation that you can move into the retirement phase of your super – where earnings are generally tax-free. It applies when you start an income stream from your super, such as an account-based pension.

From 1 July 2025, the general cap increases to:

• $2 million (up from $1.9 million)

What This Means for SMSF Members

If you have a Self-Managed Super Fund (SMSF) or are planning to start a pension, this increase gives you the ability to:

• Transfer more into the tax-free retirement phase

• Earn more tax-free investment income within your SMSF

• Revisit and adjust your retirement income strategy

• Consider timing if you’re nearing retirement or already in pension phase

Strategic Considerations

This increase may present planning opportunities – particularly if:

• You haven’t yet commenced a retirement income stream

• You’re deciding whether to start a pension before or after 1 July 2025

• You’re close to the current $1.9 million cap

It’s also important to note that individuals who have already commenced a pension will retain their personal cap, which may differ based on past events.

Want to Make the Most of the Increase?

This change is more than just a higher number – it can be a valuable opportunity to optimise your retirement income and superannuation tax outcomes. To understand what this means for you, and whether you should act before or after the new cap takes effect, speak with a qualified adviser or SMSF specialist.