What is a transition to retirement pension?
A transition to retirement pension allows you to access your super savings without having to retire from work. It can also provide the tax advantages associated with superannuation pension payments.
Why should I set up a transition to retirement pension?
A transition to retirement pension can give you increased flexibility in your finances, allowing you to access a portion of your super savings while continuing to protect and grow the balance.
Because you’re continuing to work and contributions are being made by your employer, you’re continuing to grow your super. You can also salary sacrifice into your existing super account, which can reduce your taxable income. This means that your super will continue to be invested while allowing you to access a portion of your retirement savings.
How does a transition to retirement pension work?
Lump sum and income payments
You generally cannot withdraw a lump sum from your super until you retire, reach your preservation age or satisfy another condition of release, such as on compassionate grounds.
When you begin a transition to retirement pension, for those aged under 65 you can choose to withdraw between the discounted minimum of 2% (usually 4%) and 10% of your pension account balance each year. That can be paid weekly, fortnightly, monthly or less frequently.
How is a transition to retirement pension taxed?
The amount you pay in taxes depends on your age. Members under 60 are eligible for a 15% pension rebate while members aged 60 and over receive their pension payments tax-free. If the pension benefit includes a tax-free component, such as income from after-tax contributions, this portion of the benefit payment is tax free regardless of your age.
How do I find out more?
You can find more information in the Your Investment Options: Transition to Retirement Factsheet or speak to one of our financial advisers to understand if a transition to retirement pension is right for you.
We also suggest you consider the Fund’s Target Market Determination for Pension (TMD) to help you understand the class of consumer the product is generally designed for. Access to the TMD is available on the Forms and Downloads section of our website.