From 1 July 2017 members with superannuation in pension phase are subject to a $1.6 million transfer balance cap. This means that:
John has $1.8 million in pension phase in super split between two funds, $1.4 million in fund A and $400,000 in fund B.
To comply with the changes, John applies to fund B to commute $200,000 back to accumulation phase before 1 July 2017.
This ensures that John’s remaining pension balance across both funds of $1.6 million is tax free and that no excess transfer tax is levied.
Please note special rules apply to defined benefit pensions.