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Transition to Retirement
Using super to ease slowly into retirement
What is Transition to Retirement?
Transition to Retirement (TTR) is a special pension (Income Stream) that allows you to access your super while you're still working, providing you have reached your preservation age. TTR pension payments are tax free from age 60 and automatically convert to a retirement pension when you reach 65. The Transition to Retirement pension’s maximum withdrawal is 10% of your TTR balance each year.
Understanding how a Transition to Retirement strategy works can help you make the most of your super while continuing to earn an income.
How does Transition to Retirement work?
Transitioning to retirement with Prime Super involves four simple steps:
Step 1 - Set up a TTR Income Stream account. You can do this online, by filling out the application form at the end of the PDS - Income Streams, or via your MemberOnline account if you're already a member. If you are not a member already, you can join online below
Step 2 - Transfer some of your super into your new TTR account (if you will be making or receiving super contributions you will need to keep your current (accumulation) super account open)
Step 3 - Set up pension payments
Step 4 - Optional - you can salary sacrifice to your super and could benefit from the 15% tax rate (additional contributions must be made to a current (accumulation) super account)
Transition to Retirement example
Jim has just turned 60 and is thinking about easing into retirement over the next few years.
After chatting with his super specialist, he decides to start a Prime Super Transition To Retirement (TTR) account while continuing to work full time for another year.
He transfers some of his super balance into a TTR account and begins receiving regular pension payments from it. While he is still working full-time, these pension payments help support his take-home income, allowing him to salary sacrifice some of his pre-tax salary into his super as a concessional contribution.
Depending on his personal circumstances, this strategy may help him increase the amount being contributed to super while potentially providing tax advantages. Generally, pension payments from super are tax-free for people aged 60 and over.
The following year, Jim reduces his work to three days per week. As his employment income decreases, he stops salary sacrificing and adjusts his TTR pension payments to supplement his reduced salary. This helps him maintain a level of income closer to what he previously receives while working full-time.
This example shows how a Transition to Retirement strategy can provide flexibility as you gradually reduce your working hours and move towards retirement.
Disclaimer: This example is designed to help you understand your options, but it does not take into account your personal objectives, financial situation, or needs. Tax outcomes depend on individual circumstances, so taking the time to consider your own situation or seeking financial advice can help you make the choice that feels right for you.
What are the Transition to Retirement age limits?
| TTR available? | Tax on income paid to members | |
| Under 60 | Yes (if you have reached preservation age) | Yes, but you may be eligible for a 15% tax offset i.e. 15% below your marginal income tax rate |
| 60-64 | Yes | 0% |
| 65+ | No, Retirement Income Stream applies from this age | Not applicable |
See the minimum and maximum payment limits for TTR
Ready to join a TTR Income Stream?
If you're a member, you can apply for an TTR Income Stream by reaching out to one of our super specialists, or if you're eligible and have a MemberOnline account, you can select the 'Super' tab, then 'Pension application'.
If you're not a member, you can still open a Prime Super Income Stream online.
Frequently asked questions about a Transition to Retirement Income Stream
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What are the tax advantages of TTR over 60?
The Transition to Retirement benefits are especially strong for members over 60. Not only is there generally no tax on income from your TTR account, you can also salary sacrifice from your regular income to take advantage of the potentially lower 15% concessional tax rate on before-tax contributions. Please note, whether this works for you depends on your circumstances.
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Can I take a lump sum from a Transition to Retirement pension?
No, you cannot generally take a lump sum from a TTR account because it is designed to be a Retirement Income Stream to fill the gap between your working income and your previous full-time salary. The income you draw must fall between the minimum and maximum prescribed income amounts. Lump sums can only be withdrawn from a Retirement Income Stream account.
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Does a TTR account earn interest?
Yes, a TTR account is invested in the same way as your super account, meaning it continues to earn investment returns based on the investment options you’ve selected. So, while it doesn’t earn fixed interest like a term deposit, a TTR account can earn returns through super investments.
For more information on how your balance can grow, visit Prime Super’s Investment Options page to explore the range of investment options and how returns are calculated.
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Can I use Transition to Retirement to pay off my mortgage?
A TTR provides you with additional income that you can use as you wish, including to accelerate the repayment of your mortgage.
Refer to the limits on withdrawal for more information on taking out a lump sum from your superannuation. Consider seeking financial advice before using TTR income for debt repayment.
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What are the recent Transition to Retirement changes?
The government periodically reviews transition to retirement changes to align with retirement income policy. It’s important to stay up to date with the latest super rules and payment limits. For current details, see the Income Streams PDS.
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Is Transition to Retirement best for me?
The best way of transitioning to retirement will depend on your own circumstances and work preferences. That's why we recommend booking a chat with one of our super specialists, who can offer guidance or general advice based on your individual needs, one-on-one.
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What if I need more information about Transition to Retirement?
We suggest you carefully read the PDS - Income Streams and consider talking with one of our friendly super specialists.
Want to get the most out of your super? We're here to help
At Prime Super we’ve got your back, no matter what life throws your way. Our super specialists are here to help you understand super to better prepare for retirement.
For general super enquiries, phone our team members on 1800 675 839 between 8am and 8pm AEDT/AEST Mon-Fri or email us here.
For anything more, book a chat with a super specialist.