Transition to retirement
A transition to retirement strategy allows you to access your superannuation even when you’re working on a full-time or part-time basis.
How? Once you have reached your preservation age, you can supplement your salary with a regular income from your superannuation account. This strategy can be used in a number
of different ways to boost your superannuation savings and pay less tax.
Preservation Age
| 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 |
| From 1 July 1964 | 60 |
The main ways you can use a transition to retirement strategy are:
- To decrease your working hours while maintaining your income
- To increase your income to meet expenses/pay debt/improve your lifestyle
- To increase your superannuation savings and reduce tax through salary sacrifice.
How does it work?
A transition to retirement strategy works when you combine a pension account with a superannuation contribution account which enables you to keep building your superannuation through regular contributions, while receiving regular income payments from your pension account.
Investment earnings and contributions are taxed at superannuation rates within the contribution account and earnings within your pension account are tax free. If you are over age 60, pension payments are also tax free.
If you are under 65 and not permanently retired, you are limited to an annual maximum withdrawal of 10% of your pension account balance as at 1 July.
The diagram below shows how a transition to retirement pension works.
For further information view our fact sheet on transition to retirement.
Transition to retirement calculator
If you would like to find out whether you can benefit from a transition to retirement strategy, use our transition to retirement calculator. By comparing two scenarios (one with a transition to retirement pension and one without), you should be able to determine whether you could benefit from this strategy.
The Transition to retirement calculator allows you to enter in your personal information so that you can compare what position you would be in without a transition to retirement pension versus working and receiving a pension at the same time with or without salary sacrifice contributions.
Anyone between 55 and 70 years of age can use this calculator.
If you would like more information or assistance with the transition to retirement calculator, please talk to your adviser, or call the Pension Helpline on 1800 300 353 or email: russellpension@russellsuper.com
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