Transition to retirement
A pension available from preservation age that lets you draw super income while still working.
A transition to retirement income stream can be started once you reach preservation age, without needing to retire. It pays an income while you continue working.
Withdrawals are limited to between 4% and 10% of the balance each year, and lump sums are generally not available until you meet a full condition of release.
The classic use is reducing hours without reducing income, topping up a smaller salary from super. It can also support a strategy of salary sacrificing heavily while replacing the lost take-home pay from the pension.
Working four days instead of five
Dropping to four days cuts your salary by 20%. A TTR pension replaces the shortfall, letting you reduce hours without a fall in household income.
The bit people get wrong
Earnings on a TTR pension are taxed at up to 15%, just as in accumulation. The tax-free earnings treatment only begins once you meet a full condition of release.
Common questions
When can I start a TTR pension?
Once you reach preservation age, which is 60 for anyone born on or after 1 July 1964. You do not need to reduce your hours to start one.
How much can I withdraw?
Between 4% and 10% of the account balance each financial year. The maximum is what distinguishes a TTR from a standard account-based pension.
Is a TTR strategy still worthwhile?
Less than before the earnings tax exemption was removed in 2017, but it remains useful for genuinely reducing work hours or combining with salary sacrifice at higher marginal rates.