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Back to Retirement options with Rest

Make your transition to retirement a smart one

Here’s what you need to know about a Transition to Retirement (TTR) strategy.

Feel a little clever. Retire a little better.

What is a transition to retirement (TTR) strategy? In a nutshell, it lets you manage your income differently. Along with your regular income, you also withdraw from your super using a Rest Pension account (which is likely to be charged at a lower tax rate). With a bit of thought and understanding, you can boost your super or enjoy a shorter workweek without reducing your take-home pay.

Who is it for?

To enjoy a TTR strategy, you need to be 60 or over and: 

  • Still be working 
  • Have at least $6,000 to stay in your super account, plus $10,000 to move to a pension account  
  • Want to boost your super by making extra contributions, or reduce your hours and use your super to maintain the same income.

Some examples of the strategy at work

How it can help you boost your balance

1

You’re 60 or over

You open a Rest Pension account.
2

Open a pension account

Keep your super account open to receive contributions.
3

Salary Sacrifice

Contributions taxed at 15% instead of your income tax rate.1
4

Withdraw from pension

Payments taxed at 0% instead of your income tax rate.2 
5

Your super grows

You’ll contribute more thanks to the tax benefit.
 

1. Concessional contributions are generally taxed at 15%. You may have a higher tax rate if your combined income and concessional super contributions are more than $250,000 in a financial year.

2. Payments from your pension account are tax free if you are 60 or over. Tax rates for income from your employer vary depending on your income <Tax rates – Australian resident | Australian Taxation Office>. 

Meet Jerry

Jerry wants to boost his super before he retires. He’s just turned 60 and has $176,000 in super. 

Jerry decides to salary sacrifice $19,708 each year into his super. He withdraws $13,600 each year from a Rest Pension account. 

With a TTR strategy, Jerry can reduce his annual personal tax bill by $6,108 and increase his super balance across his accounts by $2,808 after one year.

Jerry's details

Jerry’s annual cashflow

  Existing With a Rest Pension TTR account
Salary $60,000 $60,000
Less Salary Sacrifice   $19,708
Rest Pension  – pension payments   $13,600
Taxable Income $60,000 $40,292
Less Tax (total tax liability)* $9,888 $3,781
Net income received $50,112 $50,111

* Income tax plus Medicare levy, less Low Income Tax Offset (LISTO)

Jerry’s super balances

  Existing With a Rest Pension account
Account Super Super Pension
Starting balance $176,000 $6,000 $170,000
Super Guarantee e.g. Employer contributions $7,200 $7,200  
Salary Sacrifice   $19,708  
Less Rest Pension – pension payments     $13,600 
Investment earnings (net of tax) $8,029 $328 $7,357
Less Contributions tax $1,080 $4,036  
Total end of year balance (Super + Pension) $190,149 $192,957


Jerry has reduced his annual personal tax bill by $6,108 and increased his super balance across his accounts by $2,808 after one year.

Assumptions

  • Super Guarantee contributions - 12%
  • Assumed net return for Rest Super and Rest Pension accounts of 4.89%, Tax on earnings - 8%
  • Fees are not taken into account in this case study.

*All case studies are illustrative only and are not an estimate of amounts you'll receive or fees and costs you'll incur. The information contained in the case studies is current as at 1 July 2025.

How it can help you reduce work

1

You’re 60 or over

You open a Rest Pension account.
2

Open a pension account

And keep your super account open to receive contributions.
3

Reduce work hours

Then withdraw the income difference from your pension.
4

Withdraw from pension

You don’t pay tax on these payments.
5

You save less super

But enjoy more time away from work.

Meet Elaine

She wants to cut back her work week.

Elaine has just turned 60 and has $160,000 in super. She’d like to reduce her hours but doesn’t want it to impact her take-home pay. By supplementing her income with money from her super using a Rest Pension, Elaine could reduce her tax burden while maintaining her take home pay. But this will impact the overall super Elaine has when she fully retires.

Elaine's options

  Option 1 -
Work five days		 Option 2 -
Work four days		 Option 3 -
Work four days and
start a Rest Pension
Salary $50,000 $40,000 $40,000
Rest Pension – pension payments     $7,175
Total Income $50,000 $40,000 $47,175
Taxable Income $50,000 $40,000 $40,000
Less Tax (total tax liability)* $5,947 $2,913 $2,913
Net Income $44,053 $37,087 $44,262
Super & Pension Balance after 5 years $229,564 $223,512 $183,465

* Income tax plus Medicare levy, less Low Income Tax Offset (LISTO)


Assumptions

  • Inflation or CPI (Consumer Price Index) – 3.2%
  • Salary is indexed to AWOTE (Average weekly ordinary time earnings) - 3.2%
  • Super Guarantee contributions - 12%
  • Tax rates (2025-26) are not indexed
  • Assumed net return for Rest Super and Pension accounts - 4.89%, Tax on earnings - 8%
  • Fees are not taken into account in this case study.

*All case studies are illustrative only and are not an estimate of amounts you'll receive or fees and costs you'll incur. The information contained in the case studies is current as at 1 July 2025.

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Things to think about

How the strategy impacts your retirement

Consider how long until you fully retire. If you are not making any contributions, then withdrawing too much too early could impact your retirement income later.

How your needs may change over time

Some people might find their spending habits reduce later in life, and they can afford to contribute more into super now without replacing the income. Others may realise they need more money now and cannot afford to contribute as much.

Whether it will impact your Centrelink payments

Government benefits may be impacted by a TTR strategy. Rest Advice can help you find out any possible impacts to these.

Choosing the right Rest Pension account 

We offer two different pension accounts to support the TTR strategy. One for those 60 – 64 years old, and one for people who have left an employer or are 65 and over.

You’re 60–64 years old

You’re eligible for a Rest Pension Transition to Retirement account.

  • The minimum pension payment rate is 4% p.a. and the maximum is 10% p.a. of your account balance (at opening or on 1 July).
  • You can’t withdraw any additional amounts above the maximum limit.
  • Your investment earnings are taxed in this account. 

You’re 65 or older, or have left an employer since turning 60

You’re eligible for a Rest Pension Retirement account.

  • There are minimum withdrawal limits based on your age, however no maximum payment restrictions and you can withdraw when you need to.
  • Your investment earnings will be tax free.  

Get started with a Rest Pension account

To get started, work through this checklist. It’ll help you understand how to open an account and what to consider.

Both accounts are a ‘Rest Pension’ account so use the same PDS and Application Form. Depending on your age and whether you’re employed we’ll set you up with the right account. 

Get started
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