After years of hard work, you can finally take advantage of your super savings – and you don’t even have to fully retire to make the most of them.

Setting up a transition to retirement income stream (TRIS for short) with your super could help achieve your lifestyle goals and give you a better work-life balance.

It gives you the following options:

  • Reduce your work hours without reducing your income
    If you want to work less but are concerned about how reduced hours could affect your take-home pay, a TRIS can help. It allows you to set up regular payments, so you could cut down on your work hours and supplement your income with payments from your TRIS. So while you are reducing your hours, you could still get paid the same.

  • Use your super to pay off debt
    You could use the income from your TRIS to pay off high-interest debts like a mortgage or credit card bill.

  • Save on tax
    Now that you are over 60 years of age, you can use your TRIS to establish what we call a transition to retirement strategy. A transition to retirement strategy could reduce your tax and boost your super by the time you retire. Best of all, you don’t need to change your take home pay – this strategy still offers you the pay you need to get by as the years progress.

How does a transition to retirement strategy work?

Learn more about how a transition to retirement strategy could work for you by watching our short video:

Let’s have a look at two scenarios and the difference this strategy could make to a final super balance at retirement.

Scenario 1

Scenario one: Pat has a starting super balance of $200,000

In this scenario we introduce you to Pat who is 60 years of age. Pat has $200,000 in superannuation, earns $60,000 a year and decides to establish a transition to retirement strategy.

He makes salary sacrifice contributions to his super account and draws income from his transition to retirement (TRIS) account to top up his take-home pay.

Using a transition to retirement strategy Pat can significantly reduce the rate of tax paid and can add an extra $34,855 to superannuation over the next 10 years. 

The best part is that Pat has been able to maintain the same level of take-home pay each year.

Income NO transition to retirement strategy WITH transition to retirement strategy
Gross salary (incl. SG) $65,700 $65,700
Less SG contributions @ 9.5% ($5,700) ($5,700)
Less salary sacrifice $0 ($19,300)
Equals taxable income $60,000 $40,700
Less income tax and Medicare levy ($11,717) ($5,278)
Plus TRIS payments $0 $12,861
Take home pay $48,283 $48,283
Super balance start $200,000 $200,000
Plus net contributions to super $4,845 $21,250
Less TRIS payments $0 ($12,861)
Super balance after one year (excludes returns) $204,845 $208,389
Benefits to a transition to retirement strategy after one year   $3,544
Benefits to a transition to retirement strategy after ten years   $34,855

Scenario 2

Scenario two: Pat has a starting super balance of $100,000

Let’s see what happens if Pat has a starting super balance of $100,000. Again Pat is 60 years of age, is on a salary of $60,000 ($65,700 including super) and decides to open a TRIS. He makes additional concessional contributions to his super account and draws income from his TRIS account to top up his take-home pay.

In the table below Pat is $2,855 a year better off through his TRIS and salary sacrifice arrangement.

If Pat then continues this strategy over the next 10 years till retirement at age 70, Pat can significantly reduce the amount of tax paid and can add an extra $30,370 to superannuation.

Income NO transition to retirement strategy WITH transition to retirement strategy
Gross salary (incl. SG) $65,700 $65,700
Less SG contributions @ 9.5% ($5,700) ($5,700)
Less salary sacrifice $0 ($15,124)
Equals taxable income $60,000 $44,876
Less income tax and Medicare levy ($11,717) ($6,593)
Plus TRIS payments $0 $10,000
Take home pay $48,283 $48,283
Super balance start $100,000 $100,000
Plus net contributions to super $4,845 $17,700
Less TRIS payments $0 ($10,000)
Super balance after one year (excludes returns) $104,845 $107,700
Benefits to a transition to retirement strategy after one year   $2,855
Benefits to a transition to retirement strategy after ten years   $30,370

This scenario has been included for demonstrative purposes and includes general information and financial projections based on assumptions about the future. These figures do not take into account your specific objectives, financial situation or needs. It is recommended that you consult with a financial planner who can take into account your personal circumstances. 

  • Two members; one with a TRIS and the other with no TRIS
  • Members are 60 years of age with a commencing super balance of $200,000
  • Salary $60,000, plus Super Guarantee of 9.5%
  • Same net take-home pay under all scenarios
  • SG and salary sacrifice contributions are taxed at 15% when added to super, instead of an individual’s tax rate
  • Because the member is 60 years of age, there is no tax on pension payments drawn from a TRIS
  • The maximum that can be drawn down from the transition to retirement income stream each year is 10% of the balance at commencement, this is adjusted each 1 July.
  • The concessional contributions cap is $25,000 p.a.

This scenario has been included for demonstrative purposes and includes general information and financial projections based on assumptions about the future. These figures do not take into account your specific objectives, financial situation or needs. It is recommended that you consult with a financial planner who can take into account your personal circumstances.

  • Two members; one with a TRIS and the other with no TRIS
  • Members are 60 years of age with a commencing super balance of $100,000
  • Salary $60,000, plus Super Guarantee of 9.5%
  • Same net take-home pay under all scenarios
  • SG and salary sacrifice contributions are taxed at 15% when added to super, instead of an individual’s tax rate
  • Because the member is 60 years of age, there is no tax on pension payments drawn from a TRIS
  • The maximum that can be drawn down from the transition to retirement income stream each year is 10% of the balance at commencement, this is adjusted each 1 July.
  • The concessional contributions cap is $25,000 p.a.

Quality advice changes lives

In 2016, we purchased StatePlus to create one of the largest member-owned financial planning networks in Australia. Combining our financial planning teams means that our members get greater access to trusted advice.  

We're here with the right support and advice

We know retirement planning can be complex, so it’s wise to talk to a financial planner. 

StatePlus is a wholly owned financial planning business of First State Super. They can help you determine whether a transition to retirement income stream is right for you. 
 

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This is general information only and does not take into account your specific objectives, financial situation or needs. Seek professional financial advice, consider your own circumstances and read our product disclosure statement before making a decision about First State Super. Call us or visit our website for a copy. Issued by FSS Trustee Corporation ABN 11 118 202 672, AFSL 293340, the trustee of the First State Superannuation Scheme ABN 53 226 460 365.  Financial planning services are provided by our financial planning business State Super Financial Services Australia Limited, trading as StatePlus, ABN 86 003 742 756, AFSL No. 238430. StatePlus is wholly owned by First State Super.