Is It Possible to Have a Higher Cap Than 1.6 Million?

I have recently read Graeme Colley’s articles where he states that it is possible to have a higher cap than $1.6 million on 1 July if you are the recipient of a defined benefit pension. I am in this category, however, so far I have been unable to find any information on how this will apply.

Can you please give me some direction as to where I can find some more information in relation to this and how it will be calculated.

A: Thanks for the question.

Yes, it is possible to have a higher cap than $1.6m.

If you are a member of a defined benefit plan, the annual pension is multiplied by a factor of 16. For example, if your annual pension was $120,000, then your transfer balance cap would be $1,920,000. In this situation, you cap would be over $1.6m, but you would not be required to take any action to reduce it.

For a readily simple discussion of the treatment, visit the ATO’s website for a discussion on the Transfer Balance Cap at https://www.ato.gov.au/individuals/super/accessing-your-super/transfer-balance-cap/#Specialrulesforlifetimepensionsandannui

For a very technical discussion (and draft ruling), see the ATO’s LCG 2016/D10 at https://www.ato.gov.au/law/view/document?DocID=COG/LCG201610/NAT/ATO/00001&PiT=99991231235958

 

Regards


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