Lisa is about to celebrate her 60th birthday and has decided she’d like to spend more time with her grandchildren. With the right transition to retirement strategy, she can go part-time and use her super to top-up her pay. This way, her income stays the same while she gets to enjoy having more time for the things she wants to do.
Lisa earns $80,000 gross per year. She wants to work less but maintain her income.
How? She reduces her hours to 3 days per week, part-time and now earns $48,000 gross.
Lisa decides to set up an Equip Transition to retirement pension (TTR pension). She transfers a lump sum from her existing Equip account into her TTR pension account, and draws $20,680 a year from it to make up for the reduction in her take-home pay.
Our transition to retirement guide provides the clear financial information you need to make the most of your super.
Our transition to retirement guide provides the clear financial information you need to make the most of your super.
| How the figures stack up | |
|---|---|
| Contributions from before-tax salary: $19,100, less 15% contributions tax | $16,235 |
| Less what he draws down from his TTR pension | $12,424 |
| Net increase in super per year | $3,811 |
Darren is 61 and still enjoys working full-time. He decides on a transition to retirement strategy that lets him contribute more to his super fund from his before-tax income. So, he can take advantage of a lower taxable income while maximising his savings.
Darren earns $80,000 gross per year. He wants to take advantage of tax breaks and grow his super.
How? He decides to contribute the annual maximum he can before-tax – $27,500. His employer contributes $8,400 a year which he tops up with $19,100 from his salary (known as a salary sacrifice). So the total before-tax amount going into his super is $27,500 ($8,400 + $19,100).
The $19,100 is taxed at 15% contributions tax, rather than his personal tax rate of 32.5%. Because he is paying more into his super his take-home pay is reduced by $19,100. Darren decides to set up an Equip Transition to retirement pension (TTR pension). To make up for the reduction in his take-home pay he transfers a lump sum from his existing Equip account into his TTR pension account, and draws $12,424 a year from it.
This way he maintains his income of $61,933 per year.
If you are still working and have reached your super Preservation age (see table below), you have the option to access your super in the form of a Transition to retirement pension.
While you’re still working your employer will continue to pay super contributions into your existing Equip account and you can also make your own contributions.
For example, a person may finish working full-time but continue to work part-time and use some of their super savings via a Transition to retirement pension to supplement their reduced income.
| Date of birth | Preservation age |
| Before 1 July 1960 | 55 |
| 1 July 1960 – 30 June 1961 | 56 |
| 1 July 1961 – 30 June 1962 | 57 |
| 1 July 1962 – 30 June 1963 | 58 |
| 1 July 1963 – 30 June 1964 | 59 |
| From 1 July 1964 | 60 |
From age 60 and older your Transition to retirement pension payments are tax-free.
Yes, employers still need to make compulsory super guarantee contributions (10.5% for the 2022/23 financial year) for all their eligible employees, including those with a Transition to retirement pension.
A Transition to retirement pension is for individuals who are still working and have not yet retired.
An Account based pension is generally designed for individuals who have retired from the workforce.
A Transition to retirement pension automatically converts to an Account based pension when you meet a superannuation condition of release, such as retiring from work or reaching age 65. When your Transition to retirement pension becomes an Account based pension, you'll be entitled to tax-free investment earnings and there is no upper limit on the amount you can withdraw each year.
You can use a Transition to retirement pension to grow your super and pay less tax in the lead up to retirement. Or you can work less and still retain the same income*. By converting some of your super into a Transition to retirement pension, it can provide you with ongoing income and security. You can:
* Note that this can affect your retirement income — if you start drawing down your super early, you'll have less money when you fully retire.
Depending on your personal circumstances and whether you are looking to reduce your working hours, save tax or boost your super. The numbers can be complex so talk it over with us.
Full details and the forms you'll need to apply are contained in the Product Disclosure Statement (PDS), which you should consider before making any decision. The PDS is available on our website and our team is here to help you with any questions you may have.
A Transition to retirement strategy can help you ease into retirement and potentially boost your super. Learn more with our Knowledge Hub.
A Transition to retirement strategy can help you ease into retirement and potentially boost your super. Learn more with our Knowledge Hub.
