The general transfer balance cap (TBC) is likely to rise from $1.9 million to $2 million from 1 July 2025 after the latest consumer price index (CPI) figures revealed inflation remained sufficiently high to trigger the increase.
Colonial First State technical services executive director Craig Day noted the most recent CPI figures, which showed inflation rose to 3.8 per cent for the 12 months to the end of the June quarter 2024, were high enough to predict the increase 11 months before it will take place.
“The figure out [now] is 138.8, which means the general TBC will rise to $2 million next year. Normally the TBC increase is based off December quarter figures, but the current numbers are high enough now to increase the TBC in 2025, unless a bout of deflation occurs,” Day told selfmanagedsuper.
He said given the long advance notice of the increase, superannuation members looking at starting a pension income stream needed to consider whether to do so in the current financial year and receive tax benefits now or wait to benefit from the higher TBC.
“This was a consideration when the TBC went from $1.7 million to $1.9 million and it took three years for those who held off for the higher threshold to recoup the tax benefits they would have gained if they started a pension at the lower figure,” Day explained.
“The difference then there was only a six-month window to act and it was a larger increase, but this time it will be only $100,000, so will it be worthwhile to wait?
“We have run the numbers and the payback period to regain the cost of leaving assets in a taxable environment and delaying a pension to get the extra $100,000 would be 16 years compared to if someone started a pension today.”
The last rise in the general TBC took place in mid-2023 when it moved from $1.7 million to $1.9 million after a period of high inflation resulted in a double indexation of $200,000 being applied, however, a return to lower inflation meant the figure did not increase at the start of this financial year.
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