read
Transition to Retirement
Using super to ease slowly into retirement
What is transition to retirement?
Transition to retirement (TTR) is a special pension that allows you to access your super while you're still working, providing you have reached your preservation age. TTR pension payments are tax free from age 60 and automatically convert to a full pension when you reach 65. The maximum payment is 10% of your TTR balance each year.
How does transition to retirement work?
Transitioning to retirement with Prime Super involves four, pretty simple steps:
Step 1 - set up a TTR Income Stream account. You can do this online, by filling out the application form at the end of the PDS - Income Streams, or via your MemberOnline account If you're already a member.
Step 2 - transfer some of your super into your new TTR account (if you will be making or receiving super contributions you will need to keep your current super account open)
Step 3 - set up payments
Step 4 - optional - you can salary sacrifice to your super and could benefit from the 15% tax rate (additional contributions must be made to a current/accumulation super account)
Transition to retirement example
Jim has just turned 60 and currently works full-time. He earns $80,000 per year and has a healthy super balance, but he's thinking about easing back the hours. After chatting with his super specialist, he decides to transition to retirement and continue full-time for the next year, and then part-time for the following 12 months.
He opens a Prime Super TTR account and transfers some of his super balance into it.
For the first 12 months, he salary sacrifices 20% of his wage ($16,000) to his accumulation account in super, and pays the lower 15% tax rate on it since it's a before-tax contribution. He then draws $10,000 from his TTR account but doesn't have to pay tax on the income paid to him as he is over age 60.
The following year, Jim eases back to working just two and a half days per week and earns $40,000 per year but ceases his salary sacrifice arrangement and adjusts his TTR income so that he receives the equivalent to his previous full-time wage, taking into account the fact that he isn't paying tax on income received from his TTR (until Jim fully retires, or reaches age 65 the earning within the TTR are still taxable at a rate of up to 15%).
What are the transition to retirement age limits?
| TTR available? | Tax on income paid to members | |
| Under 60 | Yes (if you have reached preservation age) | Yes, but you may be eligible for a 15% tax offset i.e. 15% below your marginal income tax rate |
| 60-64 | Yes | 0% |
| 65+ | No, retirement income stream applies from this age | Not applicable |
See the minimum and maximum payment limits for TTR
What are the tax advantages of TTR over 60?
The tax on transition to retirement income is zero. What's more, you can salary sacrifice into your super from your regular income and take advantage of the lower, 15% concessional tax rate on before-tax contributions.
Can I take a lump sum from a transition to retirement pension?
No, you can't take a lump sum from a TTR account because it is designed to be an income stream to fill the gap between your working income and your previous full-time salary. The income you draw must fall between the minimum and maximum prescribed income amounts. Lump sums can only be withdrawn from a regular retirement account. You can also commute your TTR account back to accumulation if you wish.
Can I use transition to retirement to pay off my mortgage?
A TTR provides you with additional income that you can use as you wish, including to accelerate the repayment of your mortgage.
Is transition to retirement best for me?
The best way to transition to retirement will depend on your own circumstances and work preferences. That's why we recommend booking a meeting with one of our super specialists, who can offer guidance or general advice based on your individual needs, one-on-one.
For more information on planning retirement, head to our retirement hub.
What if I need more information about transition to retirement?
We suggest you carefully read the PDS - Income Streams and consider talking with one of our friendly super specialists.
We're ready to help you across all aspects of super and how it relates to your retirement.