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Transfer balance cap

Modified transfer balance cap rules for death benefits

Section: 19.5

Transfer balance cap for child beneficiaries

Where an eligible child receives a death benefit income stream from their parent, a modified transfer balance cap rule applies. This ensures that the child's own transfer balance cap at retirement is not impacted by the receipt of the pension from their parent.

A minor child's transfer balance account also generally ceases at the age of 25 when they are forced to commute their death benefit income streams. A new transfer balance account will be available to them when they commence their own retirement phase income stream in the future. This ensures that the child's personal transfer balance cap at retirement is not impacted by the receipt of the death benefit income stream from their parent.

Transfer balance cap for adult beneficiaries

From 1 July 2017, a surviving spouse or other eligible dependant (other than children) in receipt of a superannuation death benefit pension will have the value of that death benefit pension added to his or her transfer balance account.

Essentially what this means is that a surviving spouse does not inherit his or her spouse's transfer balance cap.

There are also modifications to the timing of transfer balance credits and the valuation timing of death benefit income streams, depending on the date of death and whether the death benefit income stream is reversionary or not.

Last modified: Friday, November 16, 2018