“The biggest winners will be those who, on 1 July 2025, are yet to commence a retirement phase income stream. While the biggest losers will be those who, before 1 July 2025, have already fully utilised their personal TBC,” Bussoletti said.

He said unlike the TBC, indexation of the contribution caps is linked to movements in wages and is measured by the Average Weekly Ordinary Time Earnings (AWOTE) index.

“While it is unlikely that we will see an increase to the contribution caps from 1 July 2025, a flow-on benefit of the increase to the general TBC is that it will also increase the point at which a member’s NCC cap is reduced to zero – and any NCC’s made become automatically excessive,” he said.

“Currently, this occurs where an individual’s TSB at the end of the previous financial year exceeds $1.9 million. However, from 1 July 2025, this cut-off point will increase to $2 million.”

Furthermore, he said, if an individual assumed the contribution caps remain unchanged for the 2025–26 financial year, there would also be a change to the thresholds at which the NCC bring-forward rules will apply.

“For some members, the spectre of calculating the level of indexation (if any) that they may benefit from might be a daunting prospect. For others, with the pending increase to the general TBC and the potential benefits it may bring, it may be worthwhile considering the timing of new pension commencements.”

“Understanding the level of indexation (if any) that individuals can look forward to will help identify potential strategy considerations that may be relevant to their circumstances – and potential pitfalls that may result in less than desirable outcomes.”

For example, if a member is considering the commencement of their first retirement phase income stream, they could consider deferring until 1 July 2025 to lock in a larger increase to their personal TBC.

“Similarly, members currently receiving a Transition to Retirement Income Stream (TRIS) should remain vigilant and ensure that their TRIS doesn’t inadvertently convert to a retirement phase pension before 1 July 2025,” Bussoletti said.

“Needless to say, this change will also result in further complexity being added to the strategic decision-making for members contemplating NCCs. As such, careful consideration to the size and timing of any planned NCCs will also be vital to ensure the most optimal result can be achieved based on their circumstances.”

Bussoletti gave an example of Sophie, 69, with a TSB of $1.5 million on 30 June 2024. He said Sophie could choose to make an NCC of $360,000 during 2024–25, bringing her super balance to approximately $1.86 million to fund the start of a pension – within the current $1.9 million TBC.

“Alternatively, she could contribute $120,000 during 2024-25, followed by an additional $360,000 NCC in July 2025 – by triggering the three-year NCC bring-forward rule in July 2025 when the TBC has increased to $2 million,” he said.

“In doing so, Sophie maximises the amount of superannuation benefits that can be used to commence a pension in 2025-26 – utilising the indexed TBC of $2 million. Of course, Sophie’s scenario is for illustrative purposes only as any potential earnings on her superannuation balance will also need to be factored in.”