What is a Transition to Retirement Pension?
A transition to retirement pension (TRIP) or transition to retirement income stream (TRIS) allows you to transition to retirement through part-time, full-time or casual work. That is, you don’t have to retire to withdraw your super savings.
Preservation age and withdrawal limits
To commence a TRIS, you must have reached your preservation age. This age varies depending on when you were born as outlined below.
| Date of Birth | Preservation Age |
| Before 1st July 1960 | 55 |
| 1 July 1960 – 30 June 1961 | 56 |
| 1 July 1961 – 30 June 1962 | 57 |
| 1 July 1962 – 30 June 1963 | 58 |
| 1 July 1963 – 30 June 1964 | 59 |
| After 30 June 1964 | 60 |
When running a TRIS you will be restricted in how much of your super you can access. Allowable limits of 4%-10% of your super savings each year apply, and you will keep receiving the pension as long as you have money in your super or you decide to stop the TRIS.
Making lump sum withdrawals are restricted until you reach retirement or meet specific conditions of release.
Advantages and disadvantages of TRIS
A TRIS can be used by Australians seeking to boost superannuation savings and, who at the same time, are looking to slash their tax bill. Your TRIS payments are tax-free if you are 60 years or older. This opens up an opportunity to boost your pre-tax concessional super contributions, which will be taxed at just 15%, versus the highest marginal rate of 47% outside super. By starting a TRIS, any income that you contribute can be offset with less tax free income being paid from your TRIS, effectively helping your to accumulate greater savings.
If you are aged 55-59, then your TRIS payments will be taxed at your marginal tax rate, minus a 15% tax offset. As of 1 July 2017, earnings on super assets that support a TRIS are taxed at a 15% tax rate.
A TRIS may also be useful in helping pre-retirees supplement their income and graduate their way out of the work force and into retirement.
Points to consider
- Check with your super fund if you can establish a TRIS. TRIS payments are not accommodated by defined benefit super funds. If available, getting started is straightforward. Once you reach your preservation age, fill in a pension application for your fund requesting to start the pension. If you have an SMSF, you need to organise with your accountant or SMSF administrator to complete a Pension Kit.
- Calculate your income needs to determine if it is really necessary to replace/top up your current income. Also make sure you have a retirement strategy so there are no regrets later on.
Contact UGC today to arrange your no cost, no obligation consultation and discover if a TRIS is right for you.