Question 1

I retired six years ago when with a Total Super Balance at the time of $1.2 million. I have now received an inheritance and would like to transfer this to my super account.

Do I transfer it to accumulation or retirement account and what formulas is used for adjusting my TSB up to the new TSB amount.

There are two concepts to be aware of.

First, Total Super Balance. This is fairly straightforward. You can make further after tax non-concessional contributions (NCC) to super if your balance as at the previous June 30 was under $2.1 million. Your total super balance includes all super and pension accounts you have. You can also use the “bring forward” rule and contribute more, depending on your balance. This is shown in the table below.

The other concept you need to be aware of is the Transfer Balance Cap (TBC). There is a lifetime limit on the total amount of superannuation you can move into tax-free retirement phase income streams. For the 2026-27 financial year, the general cap is $2.1 million (the same as the TSB).

For anyone who has NOT already started a superannuation pension/income stream, this is the relevant figure. If you have already started a pension previously, you will then have a personal TBC (as opposed to the general cap).

When the general cap increases by $100,000, your personal TBC does not automatically increase by $100,000. The ATO calculates your specific increase through an exact three-step formula based on your highest ever balance:

1. Percentage of cap used: The ATO divides your highest transfer balance account balance by the personal cap limit you had on that specific day.
2. Determine unused percentage: and then subtracted from 100 per cent.
3. Apply indexation top-up: Your unused percentage is multiplied by the general cap increase.

For example, let’s say you started a pension from your super with a balance of $1.2 million and at that time the TBC was $1.6 million. Effectively you used 75 per cent of the cap.

You then only get to enjoy 25 per cent of any indexation of the cap. So if the cap has increased by $500,000 because of indexation over the years, you can only use 25 per cent of that indexation ($125,000). In this example, you could start a second pension for $525,000 ($400,000 of unused cap plus $125,000 of indexation).

I have tried to keep things simple but in actuality they are a bit more complicated.

The ATO is responsible for tracking your personal TBC and it can be viewed via MyGov. However, I would also suggest you speak with your super fund or a financial adviser.

Question 2

Hi Craig,

We still have a mortgage, which is currently $400 a month. We have $58,000 still to pay on it. I have $300,000 in super. My wife and I will both be 69 years old this year. Both retired.

My question is that mortgage payments make things difficult financially. I am grateful that we do own our townhouse and we more fortunate than a lot of people. Would a home equity scheme be an option to rid us of monthly mortgage payments?

Many thanks

Hi John,

If the mortgage is worrying you, then it looks like the easiest solution would be to simply repay your mortgage with super.

Assuming no other substantial investments, this would leave you with a full age pension plus income you can draw down from your super (around $242,000 after the withdrawal).

You could use a reverse mortgage or Home Equity Scheme to repay your mortgage and then you wouldn’t have to make future loan repayments. However, this may not be the most cost-effective way.

After using your super to repay the mortgage, if you still need extra income but want to avoid drawing down your super too quickly, you could consider the government’s Home Equity Access Scheme to supplement your fortnightly income.

Craig Sankey is a licensed financial adviser and head of Technical Services and Advice Enablement at Industry Fund Services.

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