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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, pretty 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.
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 super account open)
Step 3 - set up 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). Book a chat with a super specialist to find out what works for you.
Transition to retirement example
Jim has just turned 60 and currently works full-time, but he's thinking about easing back the hours. After chatting with his super specialist, he decides to transition to retirement and continue full-time for the next year, and then part-time for the following 12 months.
He opens a Prime Super TTR account and transfers some of his super balance into it.
For the first 12 months, he draws a pension from his TTR and contributes extra to his super at the same time may help increase his balance for retirement. Generally, pensions from super are tax-free for people aged 60 and over. And depending on his circumstances, salary sacrifice could provide tax advantages.
The following year, Jim eases back to working just two and a half days per week. He ceases his salary sacrifice arrangement and adjusts his TTR income so that he receives the equivalent to his previous full-time wage.
This example shows how an effective transition to retirement strategy can provide flexibility with your income as you 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
What are the tax advantages of TTR over 60?
The transition to retirement benefits are especially strong for members over 60. The tax on income from your TTR account is zero, and you can 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. Book a chat with one of our super specialists to discuss TTR in more detail.
Can I take a lump sum from a transition to retirement pension?
No, you can't take a lump sum from a TTR account because it is designed to be an 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. You can also commute your TTR account back to accumulation if you wish.
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.
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.
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.
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 meeting with one of our super specialists, who can offer guidance or general advice based on your individual needs, one-on-one.
For more information on planning retirement, head to our retirement hub.
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.
We're ready to help you across all aspects of super and how it relates to your retirement.