The transfer balance cap: how it works in 2026-27

The transfer balance cap is a lifetime limit on the total amount of superannuation you can transfer into retirement-phase income streams, where investment earnings are tax free. The general cap is $2.1 million for 2026-27, indexed from $2 million on 1 July 2026 — but each person has a personal cap of between $1.6 million and $2.1 million, depending on when they first started a retirement-phase pension and how much of their cap they have used.

Key points:
- The [transfer balance cap](/technical-resources/glossary#transfer-balance-cap) has applied since **1 July 2017**. It limits how much super you can move into [retirement phase](/technical-resources/glossary#retirement-phase), where earnings are tax free — the general cap is **$2.1 million for 2026-27** per the [ATO rates table](https://www.ato.gov.au/tax-rates-and-codes/key-superannuation-rates-and-thresholds/transfer-balance-cap).
- Your personal cap is **not automatically $2.1 million**. It is set at the general cap when you first start a retirement-phase income stream, then rises only proportionally with each indexation — and not at all if your highest-ever transfer balance reached or exceeded your cap.
- The ATO tracks your position through a **transfer balance account**: credited when you move money into retirement phase, debited mainly when you commute amounts out. You have one account for life across all funds.
- Investment growth cannot breach the cap, and pension payments do not free up cap space — the cap measures *transfers*, not your account’s later value.
- Exceed your personal cap and you generally must commute the excess plus notional earnings, and pay excess transfer balance tax **on those notional earnings** — 15% for a first breach, 30% thereafter.
- Defined benefit pensions count at a “special value” (16 times the annualised entitlement for lifetime pensions) and cannot create an excess on their own; a separate defined benefit income cap of **$131,250 for 2026-27** can affect how the income is taxed.