Transition to Retirement

Funding transition to retirement

Looking to ease into retirement? 

A number of our clients have made a transition to retirement that is not a burden financially. They achieve this through a Transition to Retirement Income Stream/ Pension (TRIS/ TTR). This process has helped them prepare for some of the challenges of full retirement. (Full retirement brings challenges psychologically unless preparation and planning are adequate.¹)

Those over 55 years old² are able to start a TTR pension to supplement wages forgone by working less. This process is most effective when it is based on superannuation accumulation. Alternative funding for early retirement may be available, but may not be as tax effective as using the TRIS strategy. (TRIS = Transition to Retirement Income Stream.)

An income stream to supplement the reduced income from ‘partial retirement’

With transitioning to retirement the regular hours of ‘paid’ work reduce. Naturally, cutting back on hours worked will result in a reduction in the income stream hitherto relied upon. The superannuation legislation and taxation system facilitate an income stream to offset (or even replace) the reduced income. These legislative pieces give rise to the ‘transition to retirement allocated pension’ strategy (or TRIS as referenced above). This strategy becomes accessible on attainment of the superannuation preservation age of 55 years.

To benefit from these provisions the income stream must be a non-commutable income stream. Lump sums are unavailable from a pension account. The most common form of this is an allocated pension.  An allocated pension commenced for the TRIS, can convert to a normal allocated pension (AP) on full retirement.  This will be subject to having reached 60 years at the time of the full retirement.  In any event, the TRIS converts to a normal Allocated Pension an attaining 65 years of age.

A non-commutation restriction is in place until it becomes a normal AP.  There is a requirement for the ‘retiree’ to draw annual payments. These must be between 2 and 10 per cent of the account balance each year³.

Using a transition to retirement strategy to enhance superannuation retirement benefits

Some superannuation strategies utilising transition to retirement pensions, include:

• to supplement your income if you decide to work part-time (as described above);
• pension ‘income’ is an efficient way of generating cashflow to supplement your salary or wage (you can receive a 15 per cent rebate on the pension payments: and for those over 60 years of age, the pension is completely tax-free); and
• you can salary sacrifice surplus cashflow arising from the pension payments, into superannuation accumulation. 

Can you retire early with peace of mind about your financial position?

This article reflects the wealth management Services we provide to our clients: it is most relevant to superannuation and retirement planning strategies.  For information as to how you might best prepare for a financially independent retirement –

a consultation with one of the experienced advisers at Continuum Financial Planners Pty Ltd will ensure that

• we listened to your goals, and
• your circumstances understood.

You will receive personalised, professional solutions presented in your best interest.

To arrange an appointment with one of mour experienced advisers –

• phone our office on 07-34213456; or
• at your convenience, use the linked Book A Meeting facility.

¹ We have posted an article in our website Library that provides guidance on retirement planning. It’s designed to take away some of the anxiety mentioned: see ‘Preparing for Retirement‘.
² The preservation age is graduating through a series of changes between the age of 55 and 60. This is based on your year of birth: the table showing this schedule is published on the ATO website (scroll to Preservation Age table).
³ There exists a table of the minimum pension required to be drawn according to the age of the superannuation account holder. It is updated by the ATO and is linked here. Scroll down to Tables.
[Note: we have also published an article about funding retirement – including ‘partial’ and/ or early retirement – from non-superannuation monies.]

(This article was originally posted by us in October 2012.  We occasionally refresh/ update it, most recently in June 2025.)