The TBC will be tracked like an account or ledger.
- The starting balance (TBS) for tracking is:
|For members in retirement who commenced an income stream (pension account) prior to July 1 2017 and whose income stream continues after that date:
|The member’s pension account balance as at June 30 2017
|For members commencing an income stream AFTER July 1 2017||The amount the member transfers to a pension account|
- Amounts transferred into pension phase, or added to the pension account balance via certain specified events, are credits.
- Amounts commuted or rolled over, or reducing the balance via other specified events, are debits.
- Earnings and capital growth (increases in the value of assets underpinning the income stream) will be ignored when calculating the cap. There is no limit on the asset value appreciation and any excess over $1.6 million earned by the fund need not be removed.
However, if the pension balance falls below $1.6 million, due to poor investment returns, there is no provision for the member to top up the shortfall.
The legislation is intended to track only the starting amounts of a retirement income stream and specified events that increase the cap. Balance increases resulting from earnings and/or capital growth will be ignored when calculating the cap.
Members can continue to make multiple transfers into the retirement phase as long as their balance remains below the cap. All their account balances are included when working out their total pension balance, regardless of how many accounts they may have.