The most comprehensive superannuation reforms since 2007 started on 1 July 2017. You need to be aware of the rules and be proactive in planning for your retirement.
Your 1st objective is to accumulate benefits of $1.6 million in your superannuation as this is the current limit of how much you can transfer into a pension for your retirement. This $1.6 million limit is called the transfer balance cap and will be indexed by CPI but only increase in $100,000 increments.
When contributing to superannuation, your accounts are called Accumulation accounts. When Accumulation accounts are transferred to an Account Based Pension, your account balance becomes the capital value for your Pension account and it moves into ‘Pension Phase’ where you start drawing down pension payments.
Income generated from capital investments supporting pensions are tax free inside a superannuation fund. This is why Account Based Pensions are referred to as tax free because they provide tax free income inside the superannuation fund and the pension withdrawals are tax free to a member over the age of 60.
When you retire, it is to your benefit to utilise as much of the current $1.6 million transfer balance cap as you can.