What are the transition to retirement rules?

Transition to retirement arrangements and tax Investment earnings within your super account are taxed at up to 15% (the maximum rate). Once you turn 65 or meet a condition of release, your TTR investment earnings will enter the retirement phase and your investment earnings are tax free.

When can you commence a transition to retirement pension?

Once you meet a full condition of release (such as turning age 65 or notifying the fund trustee that you have retired), your pension will become fully accessible allowing you to make lump sum withdrawals, or pension payments of any amount.

What is the minimum pension withdrawal?

Depending on your age, there is a minimum amount you must withdraw as a pension payment from an account based pension each financial year….Account based pension.

Age on 1 July or commencement date Minimum % of account balance you must withdraw each year1
For 2021/22 From 2022/23 onwards
65 to 74 2.5% 5%

What is a transition to retirement income stream?

A transition to retirement (TTR) income stream is a source of income which you receive from a TTR pension. This pension is a helpful tool for those wishing to continue working during retirement years, but at reduced hours. The TTR pension provides additional income from built-up superannuation monies.

How does a transition to retirement pension work?

A TTR pension automatically converts to an account-based pension when you meet a superannuation condition of release, such as retiring or reaching age 65. When your TTR pension becomes an account-based pension, you’ll be entitled to tax-free investment earnings and no upper limit to withdrawals.

What is the difference between an account based pension and a transition to retirement pension?

An account based pension is generally designed for individuals who have retired from the workforce, yet can remain an option in some circumstances for those still working. A transition to retirement pension is for individuals who are still working and have not yet retired.

How do I start a transition to retirement?

You can start a TTR strategy by opening a TTR Income account alongside your regular super account. This way you could save more leading into retirement, or you could wind back on work while topping up your take-home pay. Find out how by downloading the Transition to retirement with TTR Income brochure (PDF).

Can you take a lump sum from a transition to retirement pension?

A TTR pension doesn’t allow you to withdraw your super as a lump sum. You can generally only do that once you’ve reached your preservation age and met certain conditions of release, such as retirement.

How much super can I have and still get the full pension?

Superannuation is counted as an asset for Age Pension purposes and will count towards the Assets Test limits….Full Age Pension – Assets Test.

Homeowner Non-Homeowner
Single $270,500 $487,000
A couple, combined $405,000 $621,500
A couple, separated by illness $405,000 $621,500

Is transition to retirement a good idea?

Advantages of a TTR strategy If you are aged 55-59 then the taxable portion of your pension payments will be taxed at your marginal tax rate, however you will receive a 15 per cent tax offset,” ASIC says. Some pre-retirees may also be able to use a TTR strategy to lower their overall tax rate.

Are TTR payments tax free?

Cut back your working hours without reducing your income. The taxable component of TTR pension payments attract a 15% tax offset between preservation age and 59 and all payments are tax-free1 at age 60 or over. Investment earnings are generally taxed at a maximum rate of 15%.

Do I pay tax on my transition to retirement pension?

Once you turn 60, any income from your TTR pension is tax free. Investment earnings are subject to the same maximum 15% tax rate that applies to super accumulation funds.

What is a transition to retirement pension?

A transition to retirement (TTR) pension allows you to supplement your income by allowing you to access some of your super once you’ve reached your preservation age.

What is the minimum pension payment for a TTR pension?

A TTR pension must generally be taken as pension payments only. For TTR pensions in the pre-retirement phase, the minimum pension payment is 4%² up to a maximum 10% of your account balance as at 1 July of each financial year or the value from the date your TTR pension started in that financial year. 1.

What changes have been made to the minimum pension payment?

To assist retirees, the Government has reduced the minimum annual payment required for account-based pensions and annuities, allocated pensions and annuities and market-linked pensions and annuities by 50% for the 2019–20 and the 2020–21 financial years.

How to satisfy the transition to retirement rules?

In order to satisfy the transition to retirement rules, you are permitted to withdraw the minimum pension amount, the maximum pension amount, or any pension figure in-between the minimum and maximum amount. An example of how the calculation of the transition to retirement minimum and maximum withdrawal amounts work is as follows: