8. Ease yourself into retirement
Did you know you can now access an income from your superannuation before you retire permanently? Russell SuperSolution Master Trust can show you how.
- How it works
- Who is eligible
- Things to consider
How it works – transition to retirement
You can access an income from your superannuation while still in the workforce through a transition to retirement pension.
A transition to retirement pension allows you to nominate how much of your superannuation balance you would like to transfer to a pension. This decision is usually based on how much income you would like the pension to generate*. Our income simulator**, which you can find under the education tools on our Web site, helps you determine the amount of income that will be generated.
* If you are a defined benefit member the amount you can transfer will be limited.
** Our income simulator is only available to Russell SuperSolution members. To access this tool, please log in to SuperSolution.
Who is eligible?
Date of Birth |
Preservation Age |
|---|---|
| Before 1 July 1960 | 55 |
| 1 July 1960 to 30 June 1961 | 56 |
| 1 July 1961 to 30 June 1962 | 57 |
| 1 July 1962 to 30 June 1963 | 58 |
| 1 July 1963 to 30 June 1964 | 59 |
| 1 July 1964 and after | 60 |
A transition to retirement pension is ideal for people who would like to ease into retirement by reducing their working hours, while maintaining a higher level of income than part-time work allows.
There are no restrictions on the number of hours you may work or the amount of income you may earn to qualify for a transition to retirement pension. You may even work full-time while receiving an income from super.
However, you need to have reached your preservation age (see above) in order to take advantage of the transition to retirement provisions.
Things to consider
General considerations:
- Transition to retirement pensions are not “commutable”. This means you won’t be able to take a lump sum amount out of the pension until you retire or reach age 65. You can, however, stop the pension and transfer your benefits back into your original Russell SuperSolution account.
- The income you receive from the pension can affect your taxation status and eligibility for Centrelink benefits.
- The effects of accessing your super early.
- If your employer will accommodate a reduction in your working hours.
- What will you do with the extra time you have? It is important to consider your lifestyle.
Tax and strategic considerations:
- There is no tax on investment growth in a pension.
- If you are between 55 and 60 you will be liable for tax using normal marginal tax rates, less a 15% tax offset available on pension income. Remember to take into account any income you receive from other sources (such as employment) as this will affect your marginal tax rate
- Those aged 60 and over can withdraw their super tax-free.
- Additional net income may allow you to make personal contributions to super and access benefits such as the Government co-contribution*.
- Before-tax super contributions (salary sacrifice) may still be made to your original Russell SuperSolution account. These contributions incur a contributions tax of only 15% (compared to an income tax of up to 46.5%) and can help you to build more retirement savings.
- Your spouse may transfer some of the contributions they have made since 1 January 2006 to your account using superannuation contribution splitting. This can be done before you commence a pension to top up the amount you have available, and may allow access to those contributions earlier than would otherwise be the case i.e. if your spouse has not yet reached their preservation age, but you have.
* See our Super Co-contribution fact sheet for more information on the Government’s co-contribution scheme.
Need more information?
Call our Helpline on 1800 555 667 or download a copy of the Product Disclosure Statement for our Pension Division.
Our friendly Helpline staff can help you with any questions you still have, and provide you with the application forms you will need.
Issued by Total Risk Management Pty Ltd ABN 62 008 644 353, AFSL 238790, RSE L0000260, (“TRM”). This document provides general information only and has not been prepared having regard to your objectives, financial situation or needs. Before making an investment decision, you need to consider whether this information is appropriate to your objectives, financial situation and needs. The information has been compiled from sources considered to be reliable, but is not guaranteed. Any examples have been included for demonstrational purposes only and should not be relied upon for the purpose of making an investment decision. Past performance is not a reliable indicator of future performance. An invitation to apply to join the Russell SuperSolution Master Trust is made by TRM in a Product Disclosure Statement (“PDS”). Any potential investor should consider the latest PDS in deciding whether to acquire, or to continue to hold, an investment in Russell SuperSolution. The PDS is currently available by phoning 1800 555 667 or by visiting www.russell.com.au. TRM is part of the Russell Investment Group (“Russell”). Russell or its associates, officers or employees may have interests in the financial products referred to in this document by acting in various roles including broker or adviser, and may receive fees, brokerage or commissions for acting in these capacities. In addition, Russell or its associates, officers or employees may buy or sell the financial products as principal or agent.