Knowledge you can build your future on
Details of the Transition to Retirement option are contained in the Pension Member Guide. Order a hard copy or download now by clicking below.
How does it work?
When you take up the Transition to Retirement option, you convert some or all of your superannuation into a pension. You can then draw out a flexible and regular income subject to minimum and maximum limits. Between age 55 and 64, the minimum is 4% and the maximum is 10% of your account balance. You generally will not be able to make lump sum withdrawals from your account (that are in addition to your regular pension payments). These restrictions apply until you permanently retire or reach age 65. Click here for more information.
What are the benefits?
Increase your retirement savings
By making salary sacrifice (before-tax) contributions to your super account and then supplementing your income with pension payments, you may find your super account grows at a faster rate. This could be particularly true on income that is taxed at a higher rate than the 15% tax rate applied to salary sacrifice contributions going into your super account.
Reduce the amount of tax you pay
When you take up a pension, you are still receiving the tax advantages of being in the super system. By using salary sacrifice you may be able to reduce the amount of tax you pay on your income. If you are 60 years of age or over, your pension payments are tax-free. If you are between 55 and 59 years of age, your pension payments are subject to income tax; however, some of your pension payment may be tax-free and you can apply for a 15% rebate on any taxable portions of your pension payment, when you submit your Income Tax Return.
Change your working hours
You could also use the Transition to Retirement option if you wanted to reduce your working hours. You can use pension payments to supplement any income you would lose. This could be particularly useful as an alternative to full retirement.
Some worked examples demonstrating the benefits are contained in the Pension Member Guide. You may also want to download the Transition to Retirement fact sheet or visit the Pension calculators on the Pension website.
Eligibility
To be eligible to take up the Transition to Retirement option, you need to have reached your minimum preservation age, which is generally between 55 and 64 years of age. Full details on eligibility can be found here.
Some more information about retirement planning
As a member of AustralianSuper you are also eligible to attend any of the 100 free retirement planning seminars we hold around Australia each year. These seminars cover a broad range of issues relating to both superannuation and retirement planning, including the Transition to Retirement option. They are run by experienced financial planners. Click here to see where and when the next seminars will be held.
How to get further advice
Industry Fund Financial Planning (IFFP)* offers AustralianSuper members access to affordable fee-for-service financial planning. Financial planning is about making your money work harder for you. IFFP’s financial planners are licensed to give advice on all financial matters. Click here for more details.
* Please note: AustralianSuper does not recommend, endorse or accept responsibility for these products or services. Terms and conditions apply – these should be obtained from IFFP. AustralianSuper does not accept liability for any loss or damage caused by the products and services provided by IFFP. AustralianSuper may invest in IFFP but does not receive any commissions from this organisation as a result of members using their products and services.