Basics about Super – Transition to Retirement – How does it work? A possible solution to the later retirement age at 70?

Basics about Super – Transition to Retirement – How does it work? A possible solution to the later retirement age at 70?

Transition to Retirement – How does it work? A possible solution to the later retirement age at 70?

Transition to Retirement (TTR, or also called transition to retirement income stream (TRIS) or income pension (TRIP)) is a gradual move to retirement – a way to enable those aged over 55 to reduce your working hours without reducing your income. You can do this by topping up your full or part-time income with a regular ‘income stream’ from your super savings. There are many reasons people why people continue to work after 55 (minimum preservation age) or 65 (when you are eligible for the Government Age Pension (within certain asset and income tests)), such as the mental stimulation, social interaction or feeling of value to society.

The Australian Government has made it possible for you to keep working while drawing down some of your super benefits. The policy, called transition to retirement, allows you to supplement your salary and maintain a comfortable lifestyle if you want to reduce work hours. You can also use the policy to save tax and boost your super before you retire, if you continue full-time work. Once you hit preservation age (55 for many people, a designated age when you can withdraw super depending on date of birth), you can draw down a pension from your super even if you are still working. The government site Money Smart has a calculator to tell you what your preservation age is and also when you are eligible to receive the Age Pension. The income stream assets earning  a return will be tax free in the super fund, concessional contributions (before tax and employer) will pay still pay 15% coming into the fund. The income stream is taxable in the hands of the receiver at their marginal rate, but over 60 the TRIS becomes a normal Income Stream and is tax free in your hands. Once you reach age 60 you may no-longer need a TRIS, if you formally retire (condition of release) and you will receive the income stream tax free.

The main conditions for Transition to Retirement are:

  • Must reach preservation age;
  • No Lump-sum withdrawal is allowed while in TRIS;
  • You must withdraw a minimum depending on age, and only up to a maximum of 10%;
  • You cannot withdraw any lump sums in TRIS;
  • Not all super funds allow TRIS, but many Self-Managed Super funds do, as long as the Trust Deed allows it.


  • Chance to boost Super up to the contribution limits;
  • Pay less tax if salary sacrificing;
  • Ease into retirement – for personal or financial reasons.

Example from Money Smart:

Andy is 55 and this is his preservation age. He earns $100,000 and wants to keep working, and has $220,000 in super. He speaks to an advisor to calculate the benefit of TRIS. He converts most of his super to a TRIS, leaving a small amount in accumulation that his employer can continue to contribute to (or he can start a new accumulation account). The employer is contributing the 9.25% – $9,250 up to June 2014, (9.5% from 1 July 2014). He salary sacrifices $15,750 and draws an income stream of $12,660. Since the tax on earnings will be zero while in TRIS, he will save over $2000 in tax yearly. See HERE.

Another example from Super Guide:

Super Guide is a wonderful resource of super information and news. An example Trish Power gives, is Joan at 62, earning $90,000 with a tax bill of $21,247, who decides to start a TRIS, salary sacrificing $25,000 (over 60 the concessional cap is $35,000). She also will receive her income stream tax free as she is over 60. With a Self-Managed super fund she also can invest in companies with good franked dividends and benefit from the franking credits (tax already paid by the company). Over all she could save $4,925 in taxes. SEE item 6 at Super Guide.

The potential benefits of a TRIS strategy depend on:

  • Age;
  • Marginal tax rate;
  • Salary Sacrifice amount;
  • It is important to seek advice and have the calculations prepared to see if the strategy will benefit you – why not call so we can arrange an advisor to sit and discuss you needs?

Got questions? If you want experts who have years of helping others, without the hype – then call for a FREE strategy session today and also get your FREE Expert Guide – Self-Managed Super and Youtop right hand side above.

If you have any questions, why not give us a call – it’s FREE also! No obligation 0407 361 596 FREE, Paul.

And book for our next  FREE Seminar – Self Managed Super Fund Roadmap – all you need to know plus bonuses see HERE and our SMSF and Property Boost to Super (combined) Free Seminar HERE


About SuperBenefitnews

Self-Managed Superannuation Service Providers in Australia. SuperBenefit provides a wholistic SMSF assistance, education and administration service continuum - 1. “assistance” is help of whatsoever nature where our overall SMSF experience and knowledge enables us to provide assistance/help without any legal (or “license”) limitations. 2. “education” involves providing knowledge through teaching, coaching and mentoring about all matters SMSF, including (but not limited to) investment issues such as equities and property, 3. “administration” encompasses all admin aspects of legally required SMSF trustee and member record keeping including (but not limited to) audit and ATO matters. In keeping with our key point that SuperBenefit does not provide Financial Advice, where issues arise from 1, 2, and/or 3 above Indicate a need for a legally authorized provider (such as a Financial Adviser) and the client does not have their own service provider, the client can utilize SuperBenefit’s ‘Connect Assist’ … SuperBenefit, in itself, does not provide Financial Advice, but it does provide the wherewithal for great SMSF service. WE do not provide Financial Advice or any other service that requires a legally authorized provider. However, where such advice or service is required we have our ‘Connect Assist’, a SuperBenefit resource we use to connect clients to a Licensed Advisor or other legally authorised service provider. Call us 0407 361 596, no obligation FREE Connection call to see how we can help you!
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