In this guide
If you’re on the final stretch to retirement and would love to start winding back your working hours but don’t think you can afford it, listen up.
Ditto if you plan to keep working full time for a while longer and want to boost your super but haven’t got the ready cash to make extra contributions.
Help could be at hand in both cases in the form of a superannuation transition-to-retirement pension or income stream (TTR) that provides limited tax-free withdrawals from super while you’re still working. This tax-free income can be used to either:
- Supplement your income and facilitate a move to part-time work or cover other costs
- Make concessional contributions to super you couldn’t otherwise afford, reducing tax and boosting your super balance.
The maximum annual withdrawal from a TTR pension is 10% of its balance and the minimum is 4% of the balance.
Good to know
Transition-to-retirement pensions go by other acronyms. We’ve chosen TTR but you may also see them abbreviated to TRIS (transition-to-retirement income stream).
Am I eligible?
If you’ve turned 60 and are still working, you’re good to go. You don’t need to cut back your working hours or change jobs.
If you’re in a defined benefit fund, you may not be able to commence a TTR, or you may only be able to use a portion of your benefit. Only about 10% of Australians are members of defined benefit funds, which tend to be public sector or older corporate funds. If this is you, talk to your fund to find out your options.
Minimum and maximum withdrawals
Required minimum and maximum payments are calculated when you first open your account and then recalculated each financial year on 1 July while you still have a balance in a TTR pension.
The maximum annual payment is 10% of your balance and the minimum is 4%. The minimum is pro-rated when you start a pension partway through the financial year, but the maximum is not.
Example minimum and maximum calculation
Jun starts a TTR pension on 1 May with a balance of $350,000.
His maximum payment for the remainder of the financial year, between 1 May and 30 June, is $35,000. This is 10% of his opening balance.
His minimum 4% payment is pro-rated based on the 61 days remaining in the financial year. The calculation is 4% x 61/365 x $350,000 = $2,340 (rounded to the nearest $10).
What are the advantages?
Withdrawals from TTR pensions are tax free, while investment earnings attract a tax rate of 15% just like super accumulation accounts.
The ability to make tax-free withdrawals prior to retirement is the key benefit of TTR pensions. You can use your payments to make it affordable to reduce your working hours, contribute more to super, or for any other purpose you wish.
Concessional contributions to super below the annual concessional cap ($30,000 in 2025–26) are taxed at the low rate of 15%. If your total super balance is below $500,000 on 30 June, you can also contribute more than the standard cap in the following financial year by using the carry-forward measure.
Making concessional contributions can be a valuable strategy if your marginal tax rate is higher than 15%. Combining these contributions with tax-free withdrawals from a TTR pension means you may be able to contribute more than you could otherwise afford.
Good to know
If you’re a member of an untaxed super fund for government employees, you may be able to make unlimited voluntary concessional contributions without paying the 15% contribution tax. Speak to your fund for advice.
Example – using salary sacrifice and TTR to boost super
Jill is 60 and earns $100,000 a year, which puts her in the 32% tax bracket (including the Medicare Levy). She has $310,000 in super and wants to keep working full time until at least age 65, but wishes she could do more to increase her retirement savings. As she doesn’t have the spare cash to make extra contributions, she decides to take advantage of a TTR strategy.
Jill starts a TTR pension with $300,000, leaving $10,000 in her accumulation account to keep it open for future contributions. She can withdraw a pension of up to $30,000 in the current financial year – 10% of the opening balance of her TTR. She decides to withdraw this amount and salary sacrifice back into her accumulation account to maintain the same take-home pay.
Jill has unused concessional cap space of $82,500 from prior years so she can exceed the standard annual $30,000 concessional cap without generating excess contributions that are taxed at a higher rate.
To reduce her take-home pay from work by $30,000 per year (and replace it with $30,000 withdrawn tax free from super), Jill salary sacrifices $44,350 in 2025–26. After 15% contribution tax is deducted, this results in $37,697.50 being added to her super account.
The bottom line is an overall tax saving and a net boost to her retirement savings of around $7,700 for the year. This is Jill’s net additional contribution minus the pension income she has withdrawn.
After her employer’s contributions are added, Jill has used up $29,350 of her unused concessional cap space from prior years. If her balance remains under $500,000 on 30 June 2026, she can continue using her remaining available carry-forward amounts in the following financial year.
Example – using a TTR for additional income
Denis has just turned 60. He’s been struggling to make ends meet recently and was considering retirement to get access to his super balance of $450,000.
After discovering the option to open a TTR pension, Denis can remain in the workforce.
By starting a pension with $440,000, leaving $10,000 in his accumulation account, Denis can withdraw up to $44,000 tax free in the first financial year. This gives him the breathing space he needs to cover his living costs without having to quit his job.
Disclaimer
Everyone’s TTR calculation will be different, depending on their income, super balance, eligibility to use carry-forward and marginal tax rate. To model your own situation you may like to try a transition-to-retirement calculator.
What are the drawbacks?
Plan your retirement (without a financial adviser)
- Step-by-step guides help you plan and take action
- Simple changes can make a big difference to your super balance
- Calculators, case studies and Q&As give you greater confidence
- Make sure your super is performing and lasts longer
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