The key difference between the accumulation phase and pension phase is the tax paid on the associated earnings. Earnings on balances in pension phase pay no tax. This differs to earnings on balances in accumulation phase which pay tax at 15% on earnings, or 10% on capital gains where the assets is held for more than 12 months.

Only members aged over preservation age are able to commence a pension and therefore take advantage of the tax concessions. They must draw the minimum pension to continue receiving these tax concessions.  Please see the preservation table.

What are the non-concessional and concessional contribution caps under the new rules?

From 1 July 2017 the non-concessional contribution cap reduces from $180,000 to $100,000. This will also affect the “bring forward” provisions.

The concessional contribution cap will reduce from $30,000 to $25,000. Those aged over 49 will have their cap reduced from $35,000 to $25,000. The table below compares the current rules to the rules from 1 July 2017:

Type To 30 June 2017 From 1 July 2017
Concessional $30,000 (or $35,000 if over 49) $25,000
Non-concessional $180,000 (and bring forward of $540,000 when eligible) $100,000 (and bring forward of up to $300,000 when eligible)