Transition to Retirement

Transition-to-RetirementIf you are 55 or older, and still working, you may be eligible for a Transition to Retirement (TTR) pension. In a nutshell, a TTR pension serves two different categories of people:

  1. It can be used for people who want to continue working full-time and would like to boost their super; and
  2. It can be used by people who would prefer to reduce their working hours while still maintaining their standard of living.

Having a TTR strategy in place means that you can increase your available funds for retirement, improve cash flow, or pay down debt. It can also be set up so you have no change in your take home pay.

What does a TTR strategy involve?

The strategy involves converting your existing accumulation super balance to a non-commutable Account Based Pension and then drawing an income from the pension.

In order to boost your retirement savings you also salary sacrifice a portion of your salary to your super fund. For most people, this means a reduction in tax from a marginal tax rate of 34% (inc. Medicare Levy) to 15%, potentially savings thousands in tax with that saving contributed to super for your retirement.

If you are aged 60 or above, the strategy becomes even better as the income from the pension is tax free. One of the other benefits is that the tax rate on earnings on your money in a super pension is 0%, as opposed to a max 15% tax rate on earnings in your accumulation super account. This means more money for your retirement.

There are some restrictions in the strategy, mainly that you have to draw between 4-10% of your pension balance as an income stream each year and you cannot withdraw lump sums from the pension.

I would like a TTR pension

If you are over the age of 55 (often referred to as the “preservation age”), a Transition to Retirement pension may be just what you need.

Our expert advisors have a plethora of experience and would be happy to discuss which options best suit you. Give us a call today.