Transition to Retirement

1. Use it to boost your super

If you’re at preservation age (see below) or over and still working, a Rest Pension Transition to Retirement (TTR) account may be one way to boost your super while maintaining similar take home pay. With a TTR account you could:

Pay less tax on your super contributions - Employer contributions and salary sacrifice contributions are generally taxed at a rate of 15%, which may be lower than the tax rate applied to your personal income.
Pay less tax on your income - If you’re 60 or over, your pension payments will be tax free.

2. Reduce work hours and maintain income using a TTR account

A TTR account can be used to supplement your salary income if you reduce your work hours. This can also be set up so that you have the same take home pay as you did before you reduced your work hours.

Case Study 1: Jerry increases his super savings with a TTR

	Existing	With a Rest Pension TTR account
Salary	$60,000	$60,000
Less Salary Sacrifice	-	$19,708
TTR Income	-	$13,600
Taxable Income	$60,000	$40,292
Tax	$8,788	$3,535
Medicare Levy	$1,200	$806
Tax Offsets^*	$100	$560
Total Tax	$9,888	$3,780
Net income Received	$50,112	$50,112

	Salary
Existing	$60,000
With a Rest Pension TTR account	$60,000
	Less Salary Sacrifice
Existing	-
With a Rest Pension TTR account	$19,708
	TTR Income
Existing	-
With a Rest Pension TTR account	$13,600
	Taxable Income
Existing	$60,000
With a Rest Pension TTR account	$40,292
	Tax
Existing	$8,788
With a Rest Pension TTR account	$3,535
	Medicare Levy
Existing	$1,200
With a Rest Pension TTR account	$806
	Tax Offsets^*
Existing	$100
With a Rest Pension TTR account	$560
	Total Tax
Existing	$9,888
With a Rest Pension TTR account	$3,780
	Net income Received
Existing	$50,112
With a Rest Pension TTR account	$50,112

	Existing	With a Rest Pension TTR account
Super
Super starting balance	$175,000	$5,000
Super Guarantee	$6,900	$6,900
Salary Sacrifice	-	$19,708
Earnings	$8,673	$746
Less Contributions and Earnings tax	$1,729	$4,051
TTR
TTR Start Balance	-	$170,000
Income Draw Down	-	$13,600
Earnings from TTR (net of tax)	-	$7,357
Total End Balance (Super + TTR)	$188,844	$192,060

	Super
Existing
With a Rest Pension TTR account
	Super starting balance
Existing	$175,000
With a Rest Pension TTR account	$5,000
	Super Guarantee
Existing	$6,900
With a Rest Pension TTR account	$6,900
	Salary Sacrifice
Existing	-
With a Rest Pension TTR account	$19,708
	Earnings
Existing	$8,673
With a Rest Pension TTR account	$746
	Less Contributions and Earnings tax
Existing	$1,729
With a Rest Pension TTR account	$4,051
	TTR
Existing
With a Rest Pension TTR account
	TTR Start Balance
Existing	-
With a Rest Pension TTR account	$170,000
	Income Draw Down
Existing	-
With a Rest Pension TTR account	$13,600
	Earnings from TTR (net of tax)
Existing	-
With a Rest Pension TTR account	$7,357
	Total End Balance (Super + TTR)
Existing	$188,844
With a Rest Pension TTR account	$192,060

Jerry reduces his annual personal tax bill by $6,108 and increases his total superannuation (including accumulation and TTR) by $3,216 after one year.

Case Study Assumptions:

Inflation or CPI (Consumer Price Index) - 2%
Salary is indexed to AWOTE (Average weekly ordinary time earnings) - 3.2%
Super Guarantee contributions - 11.5%
Tax rates (2024-25) are not indexed
Assumed net return for super and TTR 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 2024.

Case study 2: Elaine cuts work hours and maintains her income with a TTR

	Option 1 - Current situation	Option 2 - Cut back hours to four days	Option 3 - Cut back hours to four days and start Rest Pension TTR account with $150,000
Salary	$50,000	$40,000	$40,000
TTR payment	-	-	$7,175
Total Income	$50,000	$40,000	$47,175
Taxable Income	$50,000	$40,000	$40,000
Less Tax (total tax liability)^*	$6,538	$3,713	$3,713
Net Income	$43,462	$36,287	$43,462
Super & TTR Balance after 5 years	$228,555	$222,565	$192,959

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

Under option 3, Elaine can maintain her current net income, however she may need to think about how a TTR strategy will impact her super savings at retirement.

Case Study Assumptions:

Inflation or CPI (Consumer Price Index) - 2%
Salary is indexed to AWOTE (Average weekly ordinary time earnings) - 3.2%
Super Guarantee contributions - 11.5% (2024-25), includes legislated increases to SG
Tax rates (2024-25) are not indexed
Assumed net return for super and TTR accounts - 4.81%, 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 2024.

Who does a Transition to Retirement strategy generally suit?

A Rest Pension TTR account may be suitable if you have reached your preservation age and you:

are still in the workforce

have existing super benefits

want to boost your super by making additional contributions

are transitioning to retirement.

Your preservation age is the age in which you may access your super. The preservation age in Australia is 60 years old.

For more information about TTR accounts, please see our Super facts & figures

Taking out super

You can only withdraw your super from a TTR account as income payments.

Payment limits

You can receive between a minimum of 4% and a maximum of 10% pa of your TTR account balance (2024-25 financial year).

Keep your account open

Still working and want to remain insured? Keep your super account open to continue to make and receive contributions to super and maintain your insurance cover.

Contribution caps

If you have a TTR account and decide to make salary sacrifice contributions to your super account, be mindful of contribution caps. For further information on contribution caps, please see our Super facts & figures.