Market Volatility: Super’s Silver Lining
If your super balance has suffered from recent market volatility there may be opportunities available now that weren’t before. Here are a few worth exploring.
Entitlement to An Age Pension
If you’re 67 or older, a lower super balance may mean you now qualify for the Age Pension or a higher payment if you are already getting an Age Pension.
Most assets, including super and super pensions, are assessed under the Centrelink asset test to determine eligibility.
The Age Pension is subject to both income and asset tests, and the one resulting in the lower payment applies.
If your assets fall below the cut-off threshold, you may qualify for a part Age Pension (subject to the income test). If they’re below the full pension asset test threshold, you may receive the maximum entitlement.
The table below shows the asset thresholds for receiving a full pension, as well as the cut-off point beyond which you’re no longer eligible:
| Your Situation | Full Pension if Assets Less Than | Cut-Off Limit |
|---|---|---|
| Single Homeowner | $314,000 | $697,000 |
| Single Non-Homeowner | $566,000 | $949,000 |
| Couple Homeowner (Combined) | $470,000 | $1,047,500 |
| Couple Non-Homeowner (Combined) | $722,000 | $1,299,500 |
If your assets were between the thresholds and have reduced, you may be entitled to a larger Age Pension than before. As an example, if you are a single Age Pensioner and not getting the maximum Age Pension because your assets are too high, then a reduction in the value of your assets by $10,000 will increase your Age Pension by $780 per annum or $30 per fortnight under the asset test. This represents a 7.8% increase in entitlements which may be more than the income actually produced on assets.
Ability To Make Further Non-Concessional Contributions
That dip in your super balance may allow you to contribute more into super from 1 July 2025. How much you have in super and super pensions at 30 June of the previous financial year can impact how much you can contribute as a voluntary ‘after-tax’ non-concessional contribution (NCC) in the current financial year.
For instance, if your total super balance (TSB) – which includes all your superannuation interests as of 30 June 2025 (including both super and pension accounts) – is lower, you may be able to make a larger NCCs from 1 July 2025.
As a reminder, the ‘bring-forward rules’ allow eligible individuals to contribute up to three years’ worth of NCCs in a single financial year. This can be especially useful if you have a lump sum to invest, such as from an inheritance or the sale of an asset or property.
However, the amount you’re able to contribute under these rules will depend on your TSB as of 30 June 2025. With the TSB thresholds set to increase from 1 July 2025, new contribution opportunities may become available in the new financial year.
The table below outlines the TSB thresholds that will apply when determining your bring-forward cap for 2025/26:
| Thresholds and Caps in 2025/26 (From 1 July 2025) | Thresholds and Caps in 2025/26 (From 1 July 2025) | ||
|---|---|---|---|
| TSB at 30 June 2024 | Maximum NCC cap | TSB at 30 June 2025 | Maximum NCC cap |
| <$1.66m | $360,000 (3 years) | <$1.76m | $360,000 (3 years) |
| $1.66 - <$1.78m | $240,000 (2 years) | $1.76m - <$1.88m | $240,000 (2 years) |
| $1.78m - <$1.9m | $1.88m - <$2m | $1.88m - <$2m | $120,000 (1 year) |
| $1.9m or more | Nil | $2m or more | Nil |
Commence an Account-Based Pension
Starting your first account-based pension (ABP) during a market dip can be a smart move, especially if you’re within the general transfer balance cap. The cap is currently set at $1.9 million for anyone starting their pension for the first-time this year, and it limits how much you can transfer into a pension account.
As a background, when you transfer funds into an ABP, that amount counts towards your transfer balance cap. However, any growth on your investments after that point doesn’t affect your cap. So, if markets recover while your money is in the pension phase, the gains stay within your account, and you won’t be penalised for going over the cap.
And more good news – if you haven’t yet started a retirement phase income stream like an ABP, the general transfer balance cap is set to increase to $2 million from 1 July 2025, allowing you to invest a further $100,000 in the tax-free pension phase!
Seizing The Moment
A drop in your super balance might present new opportunities, talk to us to see how recent market volatility could help shape your retirement strategy.
In any of these scenarios we are here to help – as this is a matter which clearly requires the expertise of a tax professional. Email us at [email protected] or call us on (08) 7078 3505