Once you reach your preservation age you have met what is known as a 'condition of release' and are eligible to commence accessing your super benefits through a Transition To Retirement Pension (TTRP). If you were born before 1 July 1960, your preservation age is 55. Your preservation age is higher if you were born after this date.
|Date of Birth | Preservation Age
|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 1 July 1964 | 60
Under a TTRP, the amount you can withdraw is subject to minimum and maximum thresholds. The minimum amount is equal to 4% of your superannuation account balance as at 1 July or the date on which you commence a pension. The maximum amount is 10% of your super account balance. The maximum threshold rule ceases when you satisfy another condition of release such as permanent retirement after your preservation age or reaching the age of 65 years.
Below are some reasons why you may wish to commence a TTRP:
- Gaining partial access to your super without the need to retire,
- Reducing your work hours without affecting your net cash flow,
- Salary sacrifice more of your pre-tax salary to increase your super while not affecting your net cash flow, and
- Receive a tax-free income stream (if over 60 years old) reducing your overall tax position.
There are opportunities to reduce your tax liability in your name. The outcome will depend on your super account, taxable position and your age.
The income and capital gains earned on the assets that support the TTRP pension are no longer tax-free, which changed from 1 July 2017.
The tax treatment of the pension income itself will depend on the age of the member. If under the age of 60, the taxable component of the pension will be taxable at the member's marginal tax rate. However, a 15% rebate will be available to offset against the associated tax. If a member is 60 years and over, any pension received from super is tax-free and not reportable.
Please note: Constitutionally Protected Funds, such as Super SA Triple S Fund, have different tax treatments when starting a pension.
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The information provided in this brochure does not constitute advice. The information is of a general nature only and does not take into account your individual objectives, financial situation or needs. It should not be used, relied upon, or treated as a substitute for specific professional advice. We recommend that you contact Brentnalls SA before making any decision to discuss your particular requirements or circumstances.