From age 57, you can withdraw up to 10% of the balance in your pension account each financial year to pay bills, do home repairs, reduce your working hours or travel – almost anything you want!
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 also provides 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 on your behalf, 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 the pot of money will continue to be invested while allowing you to access a portion immediately.
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 age 65 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 4% and 10% of your pension account balance each year. That can be paid weekly, fortnightly, monthly or less frequently.
At 1 July each year we will advise you of your account balance and you can adjust your income for the coming year within your aged based limits.
How do the taxes work?
The amount you pay in taxes depends on your age. Members under 60 are eligible for a 15% pension rebate; members aged 60 and over are tax-free. If the pension benefit includes a tax-free component, such as income from after-tax contributions, then this portion of the benefit payment is tax free regardless of your age.
What if I want to stop using the TTR pension?
You can change your income or frequency of payments at any time, as long as you remain within the applicable limits for that financial year.
You can stop your pension account at any time and roll the balance into a superannuation accumulation account or another transition to retirement pension. There may be tax implications with this, however, so check with a financial adviser before proceeding.
Costs to start a transition to retirement pension
There are ongoing fees and costs to administer your pension account, similar to your superannuation account.
Making pension investment choices
Like your super account, you can select investments to influence the growth rate of your funds. We have a variety of options available for you to choose from, from low-risk options like Cash and Term Deposits to growth options like Shares. Learn more about risk in investing here.
Generally, lower risk investments are less likely to experience negative returns however the long-term returns will be lower and may not keep pace with inflation.