Reduce your working hours and access your super as additional income when you reach your preservation age.

Once you hit your preservation age, sometime between 57 and 60, depending on the year you were born, you have the option to access your super and continue working full or part time.

It’s called a ‘transition to retirement income stream’ (TRIS for short) and people choose it for a few reasons.

You might just love what you do, or you might need to work because of financial commitments.

Or you might simply prefer to slowly dial down your day job rather than stop overnight.

Either way, starting up a TRIS can be a highly tax-effective strategy to prepare for life after work.

Need some advice?

Get in touch

Book an appointment

How transitioning can work for you

Choosing a TRIS might be a good option on a personal front, but it could also have some financial benefits because of tax breaks.

If you reduce your hours, supplementing your income with super could mean you don’t take home any less in your pocket each month.

Or you can work full time and get the tax benefits of salary sacrificing into your super fund.

So while you may be drawing down from part of your super, you’re topping up as you go.

Tell me more about tax and stopping full-time work


 

This scenario is based on a 60 year old with a salary of $60,000 p.a. increasing in line with consumer price inflation(CPI) of 2.3% p.a. and a commencing super balance of $200,000. It includes the following assumptions:

  • Employer contributions (SG) are 9.50% of salary during 2017/18 and increase in line with legislated increases to 12% of salary during 2025/26 and beyond. It is assumed the employer has agreed to calculate SG contributions based on pre-salary sacrifice income.
  • Salary sacrifice contributions and the income from the transition to retirement pension have been adjusted annually during this projection to ensure that Sam's annual take-home pay (after allowance for assumed future changes in the cost of living) remains constant over the projection period.
  • SG and salary sacrifice contributions are taxed at 15% and there is tax on the earnings in the transition to retirement income stream account at a maximum of 15% until age 65. The first year's results are in respect of the year to 30 June 2018 and are based on applicable tax rates and thresholds for the 2017/18 financial year. 
  • Assumed net investment earnings are based on a Balanced risk profile with a 6.53% p.a. rate of return.
    • Accumulation 5.04%
    • TRIS 4.79%
    • Retirement income stream (RIS) 5.63%
  • The maximum (10%) is drawn down from the transition to retirement income stream each year. (The minimum drawdown for a transition to retirement is 4% of the account balance.)
  • The concessional contributions cap is $25,000 p.a.

This case study is for demonstrative purposes and includes general information and financial projections based on assumptions about the future. Results may differ depending on the accuracy of these assumptions, your situation and other factors.

It does not take into account your specific objectives, financial situation or needs. You should consider the information having regard to your personal circumstances. It is recommended that you consult a financial adviser if you require financial advice that takes into account your personal circumstances.

These assumptions have been provided by First State Super Financial Services Pty Ltd ABN 37 096 452 318, AFSL 240019, 1 July 2017.
This information has been prepared by FSS Trustee Corporation, ABN 11 118 202 672, AFSL 293340, the trustee of the First State Superannuation Scheme ABN 53 226 460 365.

Let’s see what happens if Pat has a starting super balance of $100,000. Again Pat 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 $3,066 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 $32,841 to superannuation.

Income
Accumulation
and no salary sacrifice
Transition
to retirement strategy in place 
Gross salary (incl. SG) $65,700 $65,700
Less SG contributions @9.5% ($5,700) ($5,700)
Less salary sacrifice $0 ($15,625)
Equals taxable income $60,000 $44,375
Less income tax and Medicare levy ($12,147) ($6,522)
Plus TRIS payments $0 $10,000
Net income (cash flow) $47,853 $47,853
Super balance start $100,000 $100,000
Plus net contributions to super $4,845 $18,126
Less TRIS payments $0 ($10,000)
Super balance after one year (includes returns) $110,144 $113,210
Benefits to a transition to retirement strategy after one year   $3,066

Assumptions

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
  • Salary $60,000, plus Super Guarantee of 9.5%
  • Same net take-home pay under all scenarios
  • First State Super administration fees are included
  • Because the member is 60 years of age, there is no tax on pension payments drawn from a TRIS
  • Assumed net investment earnings are based on a Balanced risk profile with:
    • Accumulation 5.04%
    • TRIS 4.79%
    • Retirement income stream (RIS) 5.63%
  • The maximum (10%) is drawn down from the transition to retirement income stream each year. (The minimum drawdown for a transition to retirement is 4% of the account balance.)
  • The concessional contributions cap is $25,000 p.a.

A few things to consider about starting a TRIS

Please read the Transition to Retirement Income Stream Member Booklet before deciding if this is the right product for you.

Once you've set up a transition to retirement income stream, remember:

  • You can’t withdraw your whole super balance as a lump sum.
  • You can withdraw a minimum of 4% and a maximum of 10% of the account balance into a TRIS income stream each year.
  • Drawing down from your super could mean there is less to access when you fully retire.
  • From 60 years of age you don’t pay tax on the pension payments. If you are under 60 years of age pension payments do create taxable income but this is at concessional rates.
  • A maximum investment earnings tax of 15% is applied.
  • If you aren’t sure, seek some financial advice. We have a team of financial planners available to help you.
     

I want advice about starting an income stream

What about a tax-free retirement income stream?

Once you retire completely, or you meet one of the other conditions of releaseThis may include: leaving an employer once you turn 60 or you have ceased gainful employment and do not plan to work more than 10 hours a week again, once you have reached your preservation age., you can convert your TRIS to a retirement income stream.

A retirement income stream gives you access to more of your super, offers tax free investment returns and income withdrawals and has more flexible lump-sum payment rules.

I want to learn more about a retirement income stream

Preservation age

Your preservation age depends on your date of birth and can impact when you can access your super through an income stream.

Date of birth Preservation age (years)
Before 1 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

Learn more about TRIS

Which pension is right for you?

395.1KB PDF

Moving your TRIS to a RIS

145.6KB PDF

Complete this form to convert your TRIS to a RIS

240.3KB PDF

Accessing your super

259.9KB PDF

Transition to Retirement Income Stream Member Booklet

4.5MB PDF

Milestone birthday coming up?
We can help you get retirement-ready

alt text