What is a Transition to Retirement Pension?

Jul 4, 2018 | Private Wealth, Retirement and Superannuation

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 BirthPreservation Age
Before 1st July 196055
1 July 1960 – 30 June 196156
1 July 1961 – 30 June 196257
1 July 1962 – 30 June 196358
1 July 1963 – 30 June 196459
After 30 June 196460

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.

<a href="https://ugc.net.au/author/louis/" target="_self">Louis van Coppenhagen</a>

Louis van Coppenhagen

Louis is a Financial Adviser with 15 years experience, three university degrees and specialist qualification in Aged Care.

Recent News

Episode 105: How To Wisely Use The Rest Of The Year To Get Ready To Invest In 2021?

Episode 105: How To Wisely Use The Rest Of The Year To Get Ready To Invest In 2021?

This week, the podcast kicks off with a discussion on multiple protests carried out on social media. As many investors begin to feel pessimism in the stock market, Louis provides us with information on how to best prepare yourself to take advantage when the situation reverses. Brett provides an update on the situation of different property markets across Australia. Lastly, Joel provides the US stock market performance and answers the popular question of whether now is a good time to invest.

STAY UP TO DATE

Subscribe here to receive all UGC updates as they happen

Good Move! Keep an eye on your inbox for our next update.