Super rules are changing. Time to plan ahead.

Posted 9 May 2017


From 1 July 2017 a number of legislative reforms will apply to superannuation and retirement benefits. Some of the changes are a significant departure from the existing super rules and may require some members to assess and change their retirement income plans before 1 July 2017.

As these changes may have a direct impact on your super benefits, we believe it’s important to provide you with the new information now. How the changes apply to your own individual circumstances is likely to require professional financial advice in this changing environment. We encourage you to take this opportunity to assess your situation and to implement changes (if required) before 1 July 2017.

Please keep in mind that the information included here is only a summary of some of the changes. If you also have super or retirement products with other funds, you’ll need to consider the impact of the reforms on your overall financial position.

For more information on super reforms, you can also refer to the Australian Taxation Office (ATO) website.


  • Maximum retirement benefits apply from 1 July 2017 (transfer balance cap)
    • About the transfer balance cap

      From 1 July 2017 a ‘transfer balance cap’ of $1.6 million will apply to retirement account-based pensions, retirement income streams, lifetime pensions (including reversionary pensions) and other products used to support tax-free retirement income streams.

      The aim of this cap is to limit the amount that people can have in retirement pension assets or income, and therefore limit the benefit of the current tax exemptions on earnings derived from pension assets. Generally, people will not be able to start new retirement pensions with a transfer balance over $1.6 million from 1 July 2017.

      This cap affects all current and future retirement pension accounts, including special rules that apply to some defined benefit pensions (see information below).

      What counts towards your transfer balance cap?

      This $1.6 million cap will apply across the total of all of your retirement pension accounts, not just those within our fund. Transition to retirement income streams are excluded from the cap.

      The values that the ATO will use to determine the actual value for your transfer balance cap will be as at 30 June 2017.

      Note: Special rules apply to how Defined Benefit pensions are valued for the purposes of this cap – more information is provided below.

      If your transfer balance exceeds the cap

      If the total of your existing retirement pensions (including any held in other super funds or products) is over the transfer balance cap, you should consider reducing your balance to (or below) the $1.6 million cap by 30 June 2017. You could do this by transferring any excess amount back into a super account or withdrawing it from the super system.

      If your balance is over the cap and you intend to transfer or withdraw the excess amount from your Retirement Access pension account, please complete our Withdrawal Request – Retirement Access form. So that we can process your request in time for the 30 June 2017 deadline, we must receive your completed form with valid transfer or payment instructions no later than Monday 19 June 2017.

      If your transfer balance remains over the cap after 1 July 2017

      The ATO will receive data from all pension funds with the information they need to determine your transfer balance as at 30 June 2017.
      If your transfer balance is over the cap, the ATO will advise you in writing of the amount that you’ll need to move out of the retirement pension phase. This will include the excess amount and a notional earnings amount. We expect the first ATO excess notices will be issued from 31 October 2017.

      You’ll have 60 days to act on the ATO notice and either transfer the excess amount back to a super account or withdraw it in cash.
      The ATO notice will also include the name of the pension fund/account that they’ll instruct to remove the excess amount if you fail to act in time. You’ll be able to challenge or change the ATO’s instructions. However, you’ll need to make this change to the ATO on their approved form within 60 days of the date of notice.

      Paying out the transfer balance excess

      If you don’t act on the ATO notice within 60 days, they will instruct the pension fund stated in their notice to remove the excess amount from the retirement pension account within 60 days. This is a commutation authority and the receiving fund must comply with the ATO’s instruction. During this period, the ATO expects that your pension fund will make reasonable efforts to contact you to ask for payment instructions.

      If we receive an ATO commutation authority for you, we’ll contact you about how you’d like the excess amount dealt with. If we can’t contact you, or we receive no instructions by the ATO authority deadline, we’ll transfer the excess amount out of your Retirement Access account and into an Accumulate Plus super account in our fund. We’ll write to you to let you know that this transfer has occurred.

      New tax liability

      In addition to having to remove the excess amount over your transfer balance cap (including notional earnings) from your retirement pension account, you may be required to pay tax on the notional earnings amount. Notional earnings will be calculated at the General Interest Charge rate (currently 8.76% pa) compounded daily until the excess amount is finally moved out of the retirement pension phase.

      The tax rates applying to the notional earnings are as follows:

      • For assessments during the 2017–18 financial year: 15%
      • For assessments from 1 July 2018: 15% for the first assessment and then 30% for subsequent assessments.

      Note: Some interim arrangements will apply. If your transfer balance calculated at 30 June 2017 is less than $1.7 million, you’ll have 6 months (until 31 December 2017) to reduce your retirement pension balance below the cap before having to pay this new tax liability.

      How defined benefit pensions count towards the cap

      Note: The following information addresses the new rules as they apply to Defined Benefit (DB) pensions provided by our fund. If you have a DB pension with another fund, please check with them for details, as not all DB interests are treated the same.

      Under the new reforms, special rules will apply to certain non-commutable income streams (known as capped DB income streams), including your DB lifetime pension from our fund.

      If you’re receiving a DB pension from us as at 30 June 2017 (or will begin one on or after 1 July 2017), these new rules will determine the value of your lifetime pension for the purposes of calculating your transfer balance and may modify how your pension payments are taxed.

      The rules are complex, particularly if you have both a DB pension and another retirement phase pension. You should talk to a financial adviser about your individual circumstances.

      Valuing your DB pension for the purposes of the cap

      For the purpose of the transfer balance cap, the value of your DB pension is calculated as your annual DB income entitlement multiplied by a pension valuation factor of 16.

      If you only have a DB pension and its calculated value exceeds the transfer balance cap, you will not be considered to have a transfer balance excess amount and therefore will not be required to commute or reduce your pension.

      However, if you have a DB pension and another type of retirement pension and your total transfer balance is over the cap, you will have an excess amount. In this case, you’ll be required to commute the excess amount from your other (non-DB) retirement pension, to bring your total transfer balance to or below the $1.6 million cap. If your DB pension value alone exceeds the cap, then full commutation of your other retirement pension will be required.

  • Changes to tax on Defined Benefit pension payments, including for over 60s
    • A new DB income cap will apply from 1 July 2017

      To ensure equivalent tax treatment of DB pensions with other types of retirement pensions (where the transfer balance cap will effectively limit the benefits supporting concessionally-taxed pensions), a new ‘DB income cap’ will apply from 1 July 2017.

      This DB income cap is equal to the transfer balance cap amount divided by 16, which for 2017–18 will be $1.6 million ÷ 16, or $100,000.

      If you’re aged 60 or over and your annual DB pension payments exceed the DB income cap, the following will apply:

      • the amount of your annual DB pension payments up to the DB income cap will remain tax-free, and

      • 50% of any excess amount above the DB income cap will be included in your assessable income and will be taxed at your marginal income tax rate. PAYG Withholding tax will be withheld on such pension payments. The assessable portion will also not be eligible for the 15% pension tax offset.

      The DB income cap will be pro-rated if your pension starts part way through a year, if you turn 60 part way through a year, or if you receive a death benefit pension and are under age 60.

      If you’re over 60, we may not have your tax file number (TFN) because your pension payments are currently tax-free. If the new tax will apply to you and we don’t hold your TFN, we may be required to withhold tax on the excess portion of your pension payments at the top marginal tax rate. You can provide your TFN by completing a TFN Declaration.

      If tax applies to your pension payments and you’d like us to apply the tax-free threshold to your payments, you can also complete this on the TFN Declaration.

  • Changes to contribution caps (including the new 'total super balance')
    • Remember that contribution caps apply across all of your super funds, not just contributions made in our fund. This makes it important for you to be aware of the caps and monitor your own level of contributions to minimise the risk of having to pay additional tax.

      Non-concessional contributions cap

      Right now, you may be able to make non-concessional (mostly after- tax) contributions of up to $180,000 every year before extra tax applies. From 1 July 2017, this cap will reduce to $100,000, or will reduce to zero if you have a total super balance (described below) of $1.6 million or more. This cap is subject to indexation.

      For Defined Benefit members, if your total super balance is above the $1.6 million limit and you make compulsory non-concessional (after-tax) contributions, these contributions will be subject to excess contributions tax.

      Bring forward non-concessional contributions rule

      If you’re under 65, the bring-forward rule allows you to bring forward 2 future years of non-concessional contributions in one go. This means you can currently contribute as much as $540,000 before extra tax applies. That’s up to $240,000 more than the amount that will be allowed from 1 July 2017, when the bring-forward maximum reduces to $300,000 (and being able to make any non-concessional contributions is subject to the total super balance cap).

      Transitional rules will apply if you’ve already triggered the bring-forward rule in either 2015–16 or 2016–17 but haven’t fully utilised your $540,000 by 30 June 2017. Visit the ATO’s website for details.

      Concessional contributions cap

      Concessional contributions are mostly before tax contributions, such as employer or salary sacrifice contributions. From 1 July 2017 the concessional contributions cap will reduce to $25,000 for all members, regardless of age. Currently this cap is $30,000 for those under 50 or $35,000 for ages 50 and over. This cap is subject to indexation.

      New carry forward rules for unused concessional caps

      From 1 July 2018, if your total super balance is under $500,000, you may be eligible to take advantage of unused concessional cap amounts from up to the previous 5 years. Transitional rules will apply.

      Total superannuation balance

      From 1 July 2017 a new ‘total super balance’ calculation will be used to determine your eligibility to make non-concessional contributions (and access the bring-forward arrangements) and to utilise the new unused concessional contributions provisions. It will also determine your eligibility for government co-contributions and the ability to claim the spouse contribution tax offset.

      Your total super balance will generally be calculated as at 30 June each year, as the total of all of the following amounts:

      • all your accumulation super accounts
      • all your account-based (including transition to retirement) income streams
      • all your accruing interests in a defined benefit fund*
      • all your non-account based (including defined benefit) income streams included in your transfer balance cap
      • any benefits that are not included in these amounts because they are in transit between funds on the day of measurement.

      *The valuation rules for an accruing defined benefit interest depends on the type of fund and the nature of your interest. The ATO have not yet provided us with guidelines on how an accruing defined benefit interest is to be valued for this purpose.

  • Extending tax deduction eligibility for personal contributions
    • From 1 July 2017, anyone who makes voluntary after-tax (non-concessional) contributions to their super may be eligible to claim a personal super contribution deduction.

      Currently a tax deduction can only be claimed on after-tax contributions if your income from employment is less than 10% of your total income or if your income is not as an employee for Superannuation Guarantee purposes.

      There are rules around how to claim this deduction - find out more in HOW DO I…claim a tax deduction for a super contribution?

      Claiming a tax deduction may result in personal contributions being subject to 15% contributions tax, as well as being counted towards your concessional contributions cap.

      If you withdraw or transfer some or all of your super out of your Accumulate Plus account, including where you transfer super to begin a pension, this could reduce or cancel your eligibility to claim a deduction for contributions made during the current or previous financial year. You can refer to the current Member Guide (PDS) for Accumulate Plus and Reference Guide: Boost your super for more information.

      If you're a Defined Benefit member of our fund, you won’t be able to claim a tax deduction for any compulsory or voluntary after-tax contributions that you make to your DB division. However, you may wish to consider making your voluntary after-tax contributions to an existing (or new) Accumulate Plus account in our fund to be eligible to claim the deduction. You should consider your own circumstances and seek professional advice before finalising any changes or decisions.

  • Transition to retirement income streams lose tax-free earnings status
    • From 1 July 2017, investment earnings on assets (or account balances) supporting an existing or new transition to retirement income stream will no longer be tax-free. This includes a Retirement Access Transition to Retirement income stream (TRIS) account in our fund.

      Earnings on these income streams will be taxed in the same way as accumulation super earnings, generally at a rate of 15%. This earnings tax will not be deducted directly from your account balance but will be deducted from the investment return for the investment option.

      Let us know if your circumstances change and you don’t want tax deducted from your returns

      Earnings on account-based (retirement-phase) pensions will continue to be tax-free. This means that if you meet a further condition of release for your super and no longer want tax deducted from your returns, you can let us know and we’ll convert your TRIS account into a Retirement Access Account-Based Pension. These conditions of release might include permanently retiring, turning 65, or leaving an employer at or after you turn 60.

      The government has issued draft legislation (expected to be passed on or before 1 July) that will require us to automatically convert your TRIS into an account-based pension when you turn 65, which would remove the tax on returns. We’ll keep you informed as we know more about this change.

      Important note: Please keep in mind that the value of any account-based retirement pension will count towards the new $1.6 million transfer balance cap (see above). This would include where you elect to change your TRIS to an account-based pension, or where we may be required (under the draft proposal) to make this change automatically when you turn 65.