Transition to Retirement

Transition to Retirement

Retirement has changed.

These days, many people are choosing to make a more gradual transition from the world of work to the world of retirement.

What is the transition to retirement strategy?

Paul Kinsella explains how the transition to retirement strategy works to reduce your tax and boost your retirement savings.

A Transition to Retirement (TTR) strategy can be a very powerful way to increase your super balance as you near retirement, without reducing your after-tax income. Effectively, you draw on your super to provide an income while continuing to work and making extra contributions to your super.



Who can start a Transition to Retirement Pension?

To be eligible to commence a transition to retirement pension, you must first reach your preservation age. That is the minimum age you can access your super – currently 55 years of age for people born before 1960. The table below illustrates the preservation ages based on your date of birth.

Date of Birth

Preservation Age

Before 1 July 1960

55 years old

01 July 1960 – 30 June 1961

56 years old

01 July 1961– 30 June 1962

57 years old

01 July 1962 – 30 June 1963

58 years old

01 July 1963 – 30 June 1964

59 years old

From 1 July 1964

60 years old


How it works

The transition to retirement strategy works by having two accounts:

Your superannuation account –to receive contributions from your employer and salary sacrifice contributions.

A new pension account –which is set up by transferring a portion of your accumulated superannuation benefits. This will enable you to receive a pension payment to supplement your income.

What are the tax benefits?

Commencing a Transition to retirement can provide you with the following benefits:

  • Maintain your current income when you reduce your hours of work. If you wish to reduce the hours you work, a Transition to Retirement pension enables you to supplement your part-time income.

  • Maximise your super. As you are still working you are able to make salary sacrifice contributions to your superannuation fund whilst using a transition to retirement pension.

  • Reduction in tax. A transition to retirement pension is a highly tax effective way to boost your superannuation. This is due to the concessional tax treatment on your salary sacrifice contributions as well as the income from your pension.

Preparing for a tax free retirement

Paul Kinsella discusses preparing for your retirement and the tax benefits of gradually transferring assets into super prior to your retirement.