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TBC and TSB  


TBC and TSB


Transfer Balance Cap

The Transfer Balance Cap ie the amount that can be moved into pension mode that enjoys tax free earnings on assets backing the pension is limited in 2017-18 to $1.6m. Amounts currently in pension mode in excess of this must be commuted back to accumulation mode. Capped defined benefit income streams have modified rules for the transfer balance cap; total superannuation balance and taxation of pension payments.  From 1/7/2021 the TBC increases to $1.7m.

The special value of capped defined benefit income streams is:

Capped defined benefit income stream Must meet SIS regulation Special value of TBC
Lifetime pension commenced at any time 1.06(2) Annual entitlement x 16
Life expectancy pensions commenced prior to 1/7/2017 1.06(7) Annual entitlement x remaining term
Market linked pension commenced prior to 1/7/2017 1.06(8) Annual entitlement x remaining term


After 1 July 2017 the only capped defined benefit income streams that can be commenced are non-commutable lifetime pensions.

The annual income entitlement = first payment to the individual is entitled to receive after the valuation is required divided by the number of days in the period relating to the payment times 365.

The number of years in the remaining term is rounded up.

When a capped defined benefit income stream is fully or partially commuted, the debit value used to reduce the client's transfer balance account is shown in the next table.

Income Stream Must meet SIS regulation Debit value
Lifetime pension commenced at any time 1.06(2) Original special value less any debits
Life expectancy pensions 1.06(7) A new special value calculated at time of communtation (annual income entitlement x remaining term)
Market linked pension 1.06(8) A new special value calculated at time of communtation (annual income entitlement x remaining term)
Total Superannuation Balance

The Total Superannuation Balance includes the value of the client's superannuation interest in both accumulation and retirement phase at the end of the previous year. There are special rules for how and when counted.


NetActuary P/L ABN 94108585164
3/19a Hunter Street, Hobart Tas 7000
PO Box 750, Sandy Bay Tas 7006
Email: Brian@NetActuary.com.au
Direct Telephone: (03) 9028 5002