Pensions - Transition to Retirement (TRIS or TTR)

1. Non-Commutable Income Streams (Transition to Retirement)

From 1 July 2005, even if they do not satisfy the usual conditions of release below, members can still access their superannuation benefits once they reach their preservation age provided that it is in the form of a ‘Transition to Retirement Non-Commutable Income Stream’.

‘Transition to Retirement Non-Commutable Income Streams’ may become commutable once the member satisfies a condition of release (e.g. retirement).  However, there are still some restrictions on commutation of ‘Transition to Retirement Complying Income Streams’ after retirement.  For more details go to the ‘ATO – Transition to Retirement’ links below.

Preservation Ages

Source: SIS Reg 6.01

2. For other access to benefits the following conditions of release apply:

Preserved benefits

Source: SIS Regs Schedule 1

Can generally be accessed when:

Restricted Non-Preserved Benefits

Can generally be accessed on termination of employment at any age, provided that employer has contributed to that fund.

Unrestricted Non-Preserved Benefits

Can generally be withdrawn without restriction.

NB! TEMPORARY 50% REDUCTION IN SUPERANNUATION MINIMUM DRAWDOWN REQUIREMENTS for 2019/20 to 2022/23

The amount of the minimum annual pension, calculated using the above percentages, is rounded up or down to the nearest whole $10.

In the first tax year that a reversionary pension is paid, the deceased’s minimum pension, as calculated at 1 July in that year, continues to apply.  The reversionary pensioner’s age only becomes relevant from 1 July in the second tax year (the first full tax year).

*The relevant age and account balance are the age and account balance at 1 July of the current year for existing pensions and the balance on the start date for pensions commencing during the current year.

The minimum annual payment is prorated in the first year (include the commencement date). But if the commencement day of the pension is on or after 1 June, no payment is required to be made for that financial year.

Refer to the links below for more details.
 

Taxable benefits paid as a pension (excluding death benefits) will be taxed as follows:

> The new minimum standards for pensions specify only the minimum limits to be paid at least annually.  No maximum applies (including cashing-out the whole amount), with the exception of pensions which are commenced under the transition to retirement condition of release. 

> Transition to retirement pensions have a maximum annual payment limit of 10% of the account balance at the start of each year (rounded up or down to the nearest $10), which is not prorated in the first year.  For more information on TTR strategies refer to the TTR links below.

> Pensions that meet existing rules and commenced before 1 July 2007 meet the new minimum standards.  People who had an allocated pension prior to 1 July 2007 were allowed to transfer to the new pension from 1 July 2007 without the need to commute their existing pension.

> The tax exemption for invalidity payments was extended to the self-employed from 1 July 2007.

> Prior to 1 July 2007, a withdrawal from super could be made selectively from the various components without being compelled to withdraw any of the post 6/83 component.

> From 1 July 2007, withdrawals are allocated proportionally to the taxable and tax-free components that make up the total amount of benefits in that particular pension fund at the start of the pension.  The earnings and losses of the pension fund are also allocated in the same proportion. The percentages stay the same for the life of the pension.

Tax-Free Component

From 1 July 2007 the tax-free component is made up of:

1) The crystallised amounts of the following components held in a superannuation account as at 30 June 2007 being Pre-July 83 component; Concessional component; Undeducted contributions; The CGT exempt component and Post-June 94 invalidity component.

and

2) Government Co-contributions, Spouse Contributions and Non-concessional Contributions made from 1 July 2007.

Funds in accumulation mode inside super are not assessed by Centrelink until the superannuant reaches age pension age.

However once a superannuation income stream is started Centrelink will assess the fund balance and income stream irrespective of the superannuant’s age.

Regardless of age:

> An account based pension balance is assessed as an Asset.

> Account based pension payments in excess of the Centrelink ‘deductible amount’ are assessed as income.