How Dr Michael Ooi Retired With A$2.1M in Super — and Why A$210,000 Had to Stay in Accumulation

The volunteer tent at Parkrun Carss Park smelled of instant coffee and damp fleece on a grey Saturday morning in late autumn. Dr Michael Ooi, 63, was handing out finish tokens with the cheerful efficiency of a man who once read thousands of X-rays before breakfast. He was wearing a hi-vis bib over a Mosman Running Club hoodie, and he was mid-sentence about pension phase tax rules when I walked up and introduced myself.

Michael retired from radiology eighteen months ago with A$2.1 million in super — a number that sounds like a clean finish line. It wasn’t. Because of the Transfer Balance Cap (TBC) of A$1.9 million, he could only move A$1.9M into a tax-free retirement income stream. The remaining A$210,000 stayed behind in accumulation phase, where earnings are taxed at 15 per cent. That one rule, quietly indexed and rarely explained in plain language, changed the shape of his retirement income from day one.

The Rule Most Guides Skim Over

Most guides miss the practical sting of the Transfer Balance Cap: it’s not just a ceiling on what you can move — it’s a permanent, personal ceiling that locks in the moment you first start a retirement income stream. The Australian Taxation Office confirms^[1] that the TBC applies from the date you commence your pension phase account, and any unused cap space from that date forward is calculated on a proportional basis if the general cap later increases.

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Once you’ve used your full Transfer Balance Cap, future indexation doesn’t help you one bit — Michael’s A$210,000 stayed in accumulation, taxed at 15 per cent, while his A$1.9M pension phase pool earned tax-free.

— Dr

The general TBC has sat at A$1.9 million since 1 July 2023, indexed in A$100,000 increments tied to the Consumer Price Index. From 1 July 2026, that general cap rises to A$2.1 million — but Michael, who retired before that date, won’t automatically get the full new cap. His personal TBC is calculated proportionally based on how much of his original A$1.9M cap he used. Because he used 100 per cent of it, he gets no additional indexation headroom at all.

“I assumed the cap would just go up and I’d be able to shift the rest across,” Michael told me, passing a stack of tokens to another volunteer. “Nobody told me that once you’ve used your full cap, future indexation doesn’t help you one bit.”

Accumulation Phase vs Pension Phase: What’s Actually Different

This is the wedge that separates a comfortable retirement from a costly one, and it’s worth unpacking carefully. Super money sits in one of two phases: accumulation or pension.

In accumulation phase, your fund pays 15 per cent tax on investment earnings (and capital gains above 12 months are taxed at 10 per cent). Contributions go in, the fund grows, and the ATO takes its slice each year. It’s the default state for every working Australian’s super.

In pension phase — formally called the retirement phase — investment earnings are completely tax-free. Zero. That’s the prize everyone is working toward. Once you meet a condition of release (typically reaching preservation age of 60 and retiring, for anyone born after 1 July 1964) and you start a retirement income stream, the assets backing that stream move into pension phase and the earnings tax disappears.

The TBC is the gate between the two phases. ASIC’s MoneySmart explains^[2] that the cap exists to limit the tax concession available to high-balance retirees — the government decided a tax-free pool of A$1.9M was generous enough. Anything above that stays in accumulation and keeps paying 15 per cent on earnings.

For Michael, that means his A$210,000 sitting in accumulation is generating investment returns — let’s say a conservative 6 per cent, or roughly A$12,600 a year — and roughly A$1,890 of that is going to the ATO annually in earnings tax. Not catastrophic, but not nothing either, especially compounded over a 25-year retirement.

“The transfer balance cap is a limit on the total amount of superannuation that can be transferred into the retirement phase. It is not a limit on how much you can have in superannuation overall.”

— Australian Taxation Office, Transfer Balance Cap guidance, updated February 2026^[1]

What Michael Did — and When He Did It

Michael’s planning began in earnest in early 2023, once he confirmed his retirement date. He’d been tracking the TBC since it was introduced in 2017, and he knew the cap was sitting at A$1.7M before the July 2023 indexation bump to A$1.9M. His fund balance at the time was already nudging A$2M.

In March 2023, he contacted his industry fund and asked for a formal projection of his balance at his intended retirement date. The answer came back: approximately A$2.1M by October 2024, assuming 7 per cent net returns. That confirmed the overshoot.

He then did three things. First, he checked whether he could reduce his accumulation balance before retirement by making large withdrawals — he couldn’t easily do so without triggering income tax, since he was still working. Second, he looked at whether a Transition to Retirement (TTR) income stream before full retirement might reduce his balance. He decided against it because the tax savings didn’t outweigh the complexity at his income level, particularly given the Division 293 tax that already applied to his concessional contributions above A$250,000 adjusted income.

Third — and this is the concrete action he took — on 14 October 2024, the day he officially retired, he commenced a retirement income stream of exactly A$1.9 million. The remaining A$210,000 stayed in accumulation. He set up a separate account-based pension drawing from the pension phase pool, and left the accumulation balance invested in a growth option.

“I treated the accumulation balance as a reserve,” Michael explained. “It’s still growing, still compounding, and I can draw it down as a lump sum or roll it into pension phase if the cap ever gives me room. But I had to stop thinking of it as wasted money and start thinking of it as a different pocket.”

The 2026 Indexation — and Why It Helps Some People More Than Others

A reader on Aussie Stock Forums recently asked exactly the question Michael faced: “If the TBC goes up to A$2.1M in July 2026, can I move my extra super across then?” The answer depends entirely on when you started your pension phase account and how much of your personal cap you’ve already used.

If you haven’t yet started a retirement income stream, you’ll get the full A$2.1M cap from 1 July 2026 — that’s a A$200,000 improvement on the current A$1.9M general cap, meaning A$200,000 more can sit in tax-free pension phase. SuperGuide’s analysis of the 2026 indexation confirms that individuals who have never commenced a retirement income stream receive the full benefit of each indexation increase.

But if you started your pension phase account when the cap was A$1.9M and used the full amount — like Michael — the ATO calculates your personal TBC as A$1.9M, full stop. The July 2026 increase to A$2.1M doesn’t add a single dollar to your personal cap. You only benefit proportionally if you had unused cap space when the indexation occurred.

This is the detail that trips up even financially literate retirees. The general cap goes up. Your personal cap may not.

There’s also a timing opportunity for people still in accumulation who are approaching retirement. If your super balance is currently, say, A$1.85M and you haven’t yet retired, waiting until after 1 July 2026 to commence your pension phase account means you could potentially move A$2.1M across — an extra A$250,000 in tax-free earnings territory compared to retiring today under the A$1.9M cap. At 6 per cent returns, that’s roughly A$15,000 a year in earnings that would otherwise be taxed at 15 per cent.

What Mosman’s Dr Ooi Wishes He’d Known Earlier

By the time the Parkrun field was crossing the finish line and Michael was recording times on a clipboard, we’d covered a lot of ground. He’s philosophical about the A$210,000 in accumulation — it’s not a disaster, and he has a plan for it. But he’s clear about what he’d do differently.

He would have started modelling his TBC position at least three years before retirement, not one. He would have looked harder at non-concessional contributions in his final working years to shift money into super at a lower tax rate before the cap became binding. The non-concessional cap of A$120,000 per year (or A$360,000 over three years via the bring-forward rule) was available to him, but he didn’t fully use it in his late fifties.

He also wishes he’d understood the accumulation-vs-pension distinction more viscerally, not just intellectually. “You read about it in documents,” he said, “but until you actually see the tax come out of your accumulation earnings each quarter, it doesn’t feel real.”

For readers approaching retirement in 2026, the most concrete action you can take today is to request your personal Transfer Balance Account report from the ATO via myGov. It will show your current TBC usage, any debits and credits, and your remaining personal cap. If you haven’t yet started a retirement income stream and your balance is below A$2.1M, the July 2026 indexation is directly relevant to your planning. If you’re already in pension phase with a fully used cap, the accumulation balance needs its own investment and drawdown strategy — not an afterthought.

Michael handed me a coffee from the volunteer urn as the last runners came through. He seemed entirely at peace with the numbers, even the inconvenient ones. That, perhaps, is the real retirement skill.