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New limits on
retirement products

New limits on the amount of money you can have in a retirement product.

A limit of $1.6 million now applies on the total amount you can have in tax exempt retirement products as at 1 July 2017. The limit will be indexed in $100,000 increments in line with the Consumer Price Index.

If you had a retirement product at 1 July 2017 that was at or below the limit, any investment earnings on that amount from 1 July 2017 will not count towards the limit. If you start a retirement account after 1 July 2017, investment earnings after the establishment of your account will not count towards the limit. 


If you held a balance greater than $1.6 million in these types of products on 1 July 2017, the Australian Taxation Office may direct us (or your other providers) to reduce the balance by the amount over the limit. You may also be liable to pay additional tax on the earnings on the amount above the limit. In the 2017-2018 financial year, the tax rate for the additional tax will be 15%, and will increase in subsequent years to 30%.

If the value of your retirement products exceeded the limit but was less than $1.7 million on 1 July 2017 and you reduce your account to $1.6 million by 31 December 2017, you may not be liable for additional tax on the excess amount.

Some of these retirement products, including lifetime pensions, annuities and term allocated pensions, have special rules for calculating the amount they contribute to the limit. Since these products generally cannot be commuted, a limit on the amount of pension income that can be received tax free, once the original account holder reaches age 60, applies. This limit is currently $100,000 per year and will also increase periodically with indexation. 

What if I add more to my retirement product?

The ATO will record the value of the retirement products you hold on 1 July 2017, or any new retirement products taken out after that date. They will also adjust their records with any additional amounts you transfer to a retirement product after that date.

What counts towards my limit?

  • If you have more than one of these types of retirement products, the limit generally applies to the combined amount of your money in these products across all providers. Some of these products, including lifetime pensions, annuities and term allocated pensions, have special rules for calculating the amounts which make up your limit. These rules calculate the annual value of your income stream as a lump sum equivalent, and add this to the value of your retirement products to determine whether you have exceeded the new limit.


  • The ATO records when you have reached the limit and, even if the value of your retirement products then fall below the limit, any transfers you make into the retirement products will still be counted as exceeding the limit.

What doesn’t count towards my limit?

  • If you have received a structured settlement contribution (ie a payment from a personal injury suffered) that amount will not count towards the limit.


  • If the total amount you have in your retirement products is less than the $1,6 million limit as at 1 July 2017, but grows over time to more than $1.6 million, this will not be regarded as being in excess of the limit.

It’s important to ensure you continue to have the right strategies in place to achieve your retirement goals. For more information on the changes, contact your financial adviser, or call us on 132 652 between 8am and 6pm (AEST/AEDT), Monday to Friday.

  • Here we answer the most frequently asked questions about super contributions, transition to retirement changes and limits on retirement products.

    What are before-tax (concessional) contributions?
    Before-tax (concessional) contributions include contributions that your employer makes into your super account on your behalf, salary sacrifice contributions (that is contributions you direct your employer to make on your behalf from your pre-tax salary) and personal contributions for which you claim a tax deduction.

    What are after-tax (non-concessional) contributions?
    After-tax (non-concessional) contributions include contributions that you make into your super account from your take home pay, available cash savings, or with other available capital.

    What is a transition to retirement pension?
    A transition to retirement (TTR) pension is a product offer that you commence with super savings when you reach your 'preservation age' but haven’t yet fully retired. These pensions can assist you in providing additional cash flow to supplement your employment income if you choose to reduce your working hours but don’t want to compromise your current lifestyle.

    If you have a transition to retirement pension, the minimum drawdown rate is 4% and you’ll be limited to income payments of no more than 10% of your account balance per year.  You won’t be eligible to withdraw lump sums until you have met a full condition of release.

    Your preservation age is 55 if you were born before1 July 1960, and increases depending on the year that you were born. See the Australian Tax Office website for more information

    How does a retirement product work?
    A retirement product provides an income stream to support your lifestyle in retirement. You have to receive a minimum amount from your retirement product each year. The amount you need to receive is based on your age, and your retirement product balance. The minimum drawdown rates range from 4% if you’re under age 65 up to 14% if you are over 95. Once you have retired or met certain other criteria, you are also able to withdraw lump sums if you require additional capital.  

    Your income payments can generally be made fortnightly, monthly, quarterly or yearly depending on your needs. How long your retirement product lasts will depend on how much you withdraw each year, the investment returns you receive and the amount of fees you pay.

This communication is issued by NULIS Nominees (Australia) Limited (ABN 80 008 515 633 AFSL 236465) (NULIS). It is for general information and has not taken into account any particular person’s objectives, financial situation or needs. Before deciding to make a contribution to your superannuation, interested persons should consider the appropriateness of this information having regard to their personal objectives, financial situation or needs. The information contained in this communication is current as at 1 July 2017. Any changes in the law or policy subsequent to this date have not been incorporated in this material.

NULIS is the Trustee of the MLC Super Fund (ABN 70 732 426 024) and the MLC Superannuation Fund (ABN 40 022 701 955). NULIS is part of the National Australia Bank (NAB) group of companies. An investment with NULIS is not a deposit or liability of, and is not guaranteed by NAB. Neither NULIS nor any other company in the NAB group of companies accepts any liability whatsoever for any decision that is made on the basis of or in reliance of the information contained in this material. NULIS is not a Registered Tax Agent and any tax information is of a general nature and should not be relied upon to determine your personal tax situation. It is recommended that you consult a professional tax adviser who is a Registered Tax Agent about your personal circumstances.