What is it?

TTR allows you to access your super benefits, once you have reached preservation age, in the form of a unique income stream. Ease into retirement or build your retirement benefits by commencing a transition to retirement (TTR) pension. You don’t have to retire or reduce your hours of work.

How does it work?

Here are some ways you can use TTR to your advantage:

Maintain your current lifestyle and spend fewer hours at work – by drawing from your accumulated super benefit through a TTR pension.

Work the same hours and boost your retirement savings and/or current income – by setting up a TTR pension and salary sacrificing extra amounts to your super.

How can you benefit?

1. Maintain income level through a combination of salary and pension income using a salary sacrifice and pension  strategy.

2. May reduce tax by paying just 15% tax via salary sacrifice*.

3. Receive 15% tax offset on taxable component of income payments under 60 years of age.

4. Receive tax-free pension payments from 60 years of age.

Who does the strategy work for?

TTR is suitable if you:

  • Have reached preservation age
  • Want to continue working and boost your super balance.
  • Want to reduce your working hours and supplement your reduced salary by drawing from a TTR pension.

Meet Patrick

  • 60 years of age
  • Earns $50,000 pa
  • Has $400,000 in super
  • Wants to boost retirement savings by salary sacrificing while maintaining his take home pay..

Let’s look at how he can do this through a TTR strategy:

Patrick salary sacrifices $20,250 into his super (taxed at 15% instead of higher marginal tax rate)

He transfers his $400,000 preserved super entitlements into an account-based TTR pension

To maintain his cash flow, he will receive tax-free pension payments of $13,878 pa

Combined with his remaining work salary, this allows him to maintain his after tax income level while using the benefit of tax savings to increase his retirement savings.

Here’s how it works:

Current position ($)                          With strategy ($)

Salary                                                            50,000                                                  50,000

Salary sacrifice contributions                         (0)                                                       (20,250)

Transition to retirement pension                     0                                                         14,190

Total income                                                   50,000                                                 44,097

Taxable income                                              50,000                                                 29,750

Tax payable                                                   (8,433)                                                  (2,373)

Cash flow                                                      41,567                                                   41,567

This strategy will also increase Patrick’s retirement savings by 3,022 in year one.

For advice on your personal situation and eligibility for TTR please contact me.

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