Transfer Balance Cap Increases to $2.1 Million on 1 July 2026 – What Changes and How to Plan
Quick overview – what changes on 1 July 2026
The general transfer balance cap will increase from $2 million to $2.1 million from 1 July 2026, allowing members with a total super balance of less than $2.1 million to make non concessional contributions. This change, alongside several other indexed thresholds, creates both planning opportunities and timing considerations for Australians approaching or already in retirement.
The four headline changes from 1 July 2026:
General transfer balance cap rises to $2.1 million
Non concessional contribution cap increases to $130,000, with the three year bring forward rising to $390,000
Concessional contribution cap moves to $32,500
Total super balance thresholds for non concessional eligibility shift upward in line with the new balance cap
These changes apply from the 2026–27 financial year. Your total super balance at 30 June 2026 determines your eligibility for contribution caps in the year ahead. The increases in superannuation caps are parallel to the inflation-driven adjustments across the industry, effective 1 July 2026.
This article is written for Australian readers approaching or in retirement who want a clear understanding of how the balance cap and contribution caps interact.
The transfer balance cap – what it is and how it reaches $2.1 million
The transfer balance cap is the maximum amount of superannuation you can transfer into retirement phase, where investment earnings are taxed at 0%. In accumulation phase, earnings face 15% tax. The cap is a lifetime limit, not an annual one.
The transfer balance cap was introduced on 1 July 2017 at $1.6 million and is indexed periodically to the Consumer Price Index in $100,000 increments, with the next increase set for 1 July 2026.
Financial Year | General Transfer Balance Cap |
|---|---|
2017–18 to 2020–21 | $1,600,000 |
2021–22 to 2022–23 | $1,700,000 |
2023–24 to 2024–25 | $1,900,000 |
2025–26 | $2,000,000 |
2026–27 | $2,100,000 |
This $100,000 increase is driven by Consumer Price Index movements and adjusts tax free retirement account limits and broader superannuation contribution limits.
General cap versus personal cap: Your personal transfer balance cap is typically locked in at the general TBC level when you start your first retirement phase income stream. If you started a pension when the cap was $1.7 million, that remains your personal TBC unless proportional indexation applies to unused cap space.
Proportional indexation only benefits those who have never fully used their cap. The Australian Taxation Office tracks this through your transfer balance account.
What the 2.1 million transfer balance cap means for different retirees
The cap increase affects people differently based on their pension phase status and cap utilisation.
If you have not yet started a retirement phase pension:
Individuals starting an account based pension on or after 1 July 2026 will receive the full personal transfer balance cap of $2.1 million. This provides an extra $100,000 in the tax free earnings environment compared to commencing before that date. Over 25 years at 7% returns, this advantage compounds significantly.
If you are already in pension phase with unused cap:
Existing pensioners who have partially used their cap will receive a proportional indexation increase based on their past cap usage, not the full $100,000 increase. For example, if you have only used 50% of your personal cap, you may receive a $50,000 uplift when the general cap rises by $100,000.
If you have fully utilised your cap:
Members who have not yet started a retirement phase pension or have only partially used their personal transfer balance cap may benefit from the increase to the transfer balance cap, while those who have fully utilized their cap will not receive any increase. However, flow-on changes to non concessional contributions eligibility may still create opportunities in accumulation phase.
Action point: Check your transfer balance account and highest ever balance through myGov or your adviser before making new pension or commutation decisions.
How the 1 July 2026 changes affect contribution caps and total super balance thresholds
From 1 July 2026, both concessional and non concessional limits reset.
Concessional contributions: The concessional contributions cap will increase from $30,000 to $32,500 from 1 July 2026, impacting the amount individuals can contribute to their superannuation through tax return deductions or employer contributions.
Non concessional contributions: The non concessional contributions cap will rise from $120,000 to $130,000 per annum starting 1 July 2026, allowing for larger after-tax super contributions.
Bring forward rule: From 1 July 2026, the maximum bring forward contribution limit will increase to $390,000 over three years, contingent on total super balance thresholds. Once you trigger bring forward, your cap is fixed based on the rules in that financial year.
Defined benefit income cap: The defined benefit income cap will rise from $125,000 to $131,250 for the 2026–27 income year, affecting tax free treatment of defined benefit income streams.
Total super balance thresholds for 2026–27 (based on 30 June 2026 balance):
TSB at 30 June 2026 | Annual NCC Cap | Bring Forward Available |
|---|---|---|
Below $1.84 million | $130,000 | $390,000 (3 years) |
$1.84m – $1.97m | Up to $260,000 | $260,000 (2 years) |
$1.97m – $2.10m | $130,000 | Nil (standard cap only) |
$2.10m or above | Nil | Nil |
Individuals with a Total Superannuation Balance up to $2.1 million as of 30 June 2026 can make non concessional contributions in the 2026–27 financial year. Individuals with a Total Superannuation Balance above the old limit of $2 million may find eligibility to make post-tax contributions again if their balance is below the new $2.1 million threshold by 30 June 2026.
Your total super balance is always measured at the previous 30 June, making June 2026 a critical measurement date.
Before or after 30 June 2026? Timing strategies around 1 July
One of the most practical questions in 2025–26 is whether to act before or after the new limits take effect.
When it can make sense to wait until 1 July 2026:
Starting your first pension with a $2.1 million personal TBC instead of $2.0 million
Accessing the higher $130,000 annual NCC cap and $390,000 bring forward
Restoring non concessional eligibility if your TSB falls below $2.1 million by 30 June 2026
Waiting until 1 July 2026 to make significant after-tax contributions can provide access to larger caps and more flexibility, potentially allowing for a total non concessional contribution of up to $510,000 across two financial years.
When it can make sense to act before 30 June 2026:
Using remaining 2020–21 carry forward concessional contribution entitlement before it expires
Making deductible concessional contributions to manage taxable income in 2025–26
Avoiding pushing your 30 June 2026 total super balance above thresholds that would remove 2026–27 NCC access
Worked example: A person with TSB around $800,000 contributes $120,000 non concessional before 30 June 2026 without triggering bring forward, then uses $390,000 bring forward after 1 July 2026, totalling $510,000 over a short bring forward period.
Key risks: Accidentally triggering bring forward early locks you into old limits. Mis-measuring total super balance at 30 June can result in excess contributions. The optimal timing depends on your age, TSB at 30 June 2026, unused concessional contributions, and retirement circumstances.
Interaction with other rules – carry forward concessional contributions and Division 296
The transfer balance cap indexation does not operate in isolation.
Carry forward concessional contributions:
Individuals with a total super balance below $500,000 can utilize unused concessional contributions from the previous five financial years, but any unused amounts from the 2020/21 financial year will expire on 30 June 2026. Someone under the TSB limit at 30 June 2026 could potentially contribute up to $175,000 in concessional contributions in 2026–27 by combining the new $32,500 cap with prior unused amounts.
Division 296:
Division 296 applies a 15% tax on earnings attributable to total super balances above $3 million. This threshold does not change when the transfer balance cap moves to $2.1 million. The general TBC increase allows more funds in tax free pension phase, yet that pension balance still counts towards the $3 million Division 296 threshold.
For those with balances approaching $3 million, shifting an additional $100,000 into pension phase from 1 July 2026 requires weighing Division 296 exposure against estate planning and personal objectives.
Practical pension phase planning around 1 July 2026
If not yet retired:
Review projected super balance at 30 June 2026
Decide whether to commence pension before 30 June (locking in $2.0m cap) or delay until after 1 July (locking in $2.1m)
Consider income needs in the interim
If already in pension phase with unused cap:
Confirm your proportional indexation amount from the ATO
Consider starting an additional pension after 1 July to use new headroom
Recontribution strategies:
Withdrawing benefits and recontributing as non concessional contributions after 1 July 2026, where total super balance is below $2.1 million, can improve tax free components for death benefit purposes. This is particularly relevant for superannuation fund members with adult children as beneficiaries.
Consider minimum pension drawdowns, fund liquidity, and how changes affect estate planning for spouses. Past performance of super funds should inform but not dictate these decisions. Always seek advice based on your financial situation.
How Money Path can help you navigate the 2.1 million transfer balance cap
Money Path specialises in retirement and superannuation strategy, helping clients align their contributions, pension timing and estate planning with changing superannuation rules such as the 1 July 2026 cap increases.
Balance and cap review: Money Path can review your current total super balance, projected 30 June 2026 position, and transfer balance account to show exactly how much personal cap remains and how transfer balance cap indexation will apply
Scenario modelling: Compare strategies such as “start pension before 30 June 2026” versus “wait until after 1 July 2026”, or prioritise different contribution approaches under the indexed thresholds
Complex situations: Support for multiple funds, defined benefit interests, high-balance members approaching the $3 million threshold, and couples coordinating both partners’ caps
Ongoing framework: Your super, pension and contribution strategies can be revisited each year as caps move, not just at major indexation points
Book a personalised super and retirement planning session with Money Path to ensure your approach to the new 2.1 million transfer balance cap and higher contribution caps is tailored to your own numbers and goals.
Frequently asked questions – transfer balance cap and 1 July 2026 changes
What is the general transfer balance cap and what will it be from 1 July 2026?
The general transfer balance cap is the lifetime limit on the maximum amount you can hold in retirement phase. From 1 July 2026, the balance cap will increase to $2.1 million.
Will my personal transfer balance cap automatically increase to $2.1 million?
Only those with unused cap space receive proportional indexation. If you have fully utilised your full transfer balance cap, you receive no increase.
How does the 1 July 2026 change affect non concessional contributions and the bring forward rule?
From 1 July 2026, the non concessional contributions cap will increase to $130,000, and the three-year bring-forward limit will rise to $390,000, allowing for larger contributions into superannuation. Your eligibility depends on your total super balance at 30 June 2026 meeting the TSB limit requirements.
What happens if my total super balance is $2.1 million or more on 30 June 2026?
Your non concessional contribution cap is nil for 2026–27 and you cannot trigger bring forward in that year.
Can I contribute $120,000 before 30 June 2026 and then trigger the $390,000 bring forward after 1 July 2026?
Yes, this can be possible if the $120,000 does not trigger bring forward and total super balance thresholds are met. Seek advice to determine eligibility and confirm your circumstances before acting.
What carry forward concessional contributions expire on 30 June 2026?
Unused 2020–21 amounts expire after the final year of the five-year window. Your TSB must be under $500,000 at 30 June for carry forward rules to apply.
Does the increase in the transfer balance cap change the $3 million Division 296 threshold?
No. Division 296 has its own fixed $3 million threshold indexed based on separate rules and does not move with the transfer balance cap.
Should I start my pension before or after 1 July 2026?
There is no universal rule. The right answer depends on your personal transfer balance cap, income needs, total super balance at 30 June 2026, and contribution plans. Money Path can provide tailored advice.
Key takeaways and next steps
The general transfer balance cap increases to $2.1 million from 1 July 2026. Non concessional and concessional contribution caps also increase. The 30 June 2026 measurement point determines eligibility for the higher caps and marks the expiry of 2020–21 carry forward amounts.
People not yet in pension phase may gain from delaying pension commencement until after 1 July 2026 to secure the higher personal cap, but only if this aligns with income needs
People already in pension phase should verify unused cap space and how proportional indexation on 1 July 2026 creates scope for additional transfers
Contribution decisions in 2025–26 and 2026–27 must be coordinated to avoid excess contributions and missed opportunities
Contact Money Path for a personalised review of your super and retirement position ahead of 30 June 2026 so you enter the 2.1 million transfer balance cap era with a clear, optimised strategy.
