Transfer balance cap and minimum pension drawdowns, 2026–27
Super builds up in an accumulation account, where the fund pays up to 15% tax on its earnings. Once you retire and can reach it, it can move into the retirement phase as an account-based pension, where earnings are tax-free (above a $3 million total balance, Division 296 taxes a share of them to the person). Two rules shape that phase: a cap on how much can go in, and a minimum that has to come out each year.
When super can be reached
Super is preserved until a condition of release is met. For anyone born after 30 June 1964 the preservation age is 60, so retiring at 60 or later releases it; at 65 it is released whether or not you still work. From 60, payments from a taxed fund are tax-free.
The transfer balance cap: $2.1 million
The general transfer balance cap is $2.1 million for 2026–27. It limits the total you can move into the retirement phase over your life, not each year. Anything above it can stay in accumulation, where earnings are still taxed, or be taken out.
| Financial year | General transfer balance cap |
|---|---|
| 2017–18 to 2020–21 | $1.6 million |
| 2021–22 to 2022–23 | $1.7 million |
| 2023–24 to 2024–25 | $1.9 million |
| 2025–26 | $2.0 million |
| 2026–27 | $2.1 million |
The general cap rises with inflation in $100,000 steps. Your own cap is set the first time you move money into the retirement phase, at the general cap that year, and only the share you haven’t used rises with later steps. Someone who started a pension with half their cap in 2023–24 gets half of each later rise; someone who used all of it gets none.
Minimum drawdowns
An account-based pension has to pay out at least a set share of its balance on 1 July each year, by your age that day; in the year a pension starts, the minimum is pro-rated by the days left. From 2023–24 the minimums are back at their standard rates:
| Age on 1 July | Minimum each year |
|---|---|
| Under 65 | 4% |
| 65 to 74 | 5% |
| 75 to 79 | 6% |
| 80 to 84 | 7% |
| 85 to 89 | 9% |
| 90 to 94 | 11% |
| 95 and over | 14% |
So a pension holding $600,000 on 1 July for someone aged 67 has to pay at least $30,000 that year. There is no maximum: more can be drawn, and the balance runs down faster. The minimum is rounded to the nearest $10.
Why it matters to a plan
- The minimum is paid whether or not it is spent, so in a year with little spending it builds up outside super, where its earnings are taxed at your marginal rate.
- The rising percentage means a balance draws down faster in later years, even when nothing else changes.
- Money in the retirement phase counts for the Age Pension’s assets test and is deemed for its income test (see deeming rates).
- A couple has a cap each, so how super is split between them can decide whether all of it fits in the retirement phase.
In a projection
My Runway works in whole financial years. It starts a pension on each super account in the first year its owner has retired and can reach it, moves in up to what is left of their transfer balance cap, with proportional indexation, and keeps anything over in accumulation. It pays at least the minimum for their age each year, a full year’s minimum in the year the pension starts rather than one pro-rated by the days left, and draws more when the plan needs it, in the order set under Drawdown.
General information only, not financial advice. It doesn’t consider your circumstances; check the figures with the source and speak to a licensed adviser before you act on them.