The Howard Government originally introduced the TTR pensions for people leading up to retirement so that they are able to reduce their working hours and give them the ability to replace some or all of their pay that was lost by drawing an income stream from their super.

TTR pension begins with transferring part of your superannuation into a pension account. This is normally when you reach preservation age, which is currently between 55 and 60 years old however the work favourably once you turn 60 and are able to receive the income tax-free.

Retiring or reducing your hours are not a requirement for you. This is known as a ‘transition in retirement’. In turn, all you have to do is simply put some of your superannuation money into this income stream.

You are required to withdraw a minimum of 4 per cent and up to maximum of 10 per cent of the balance of your pension account balance each financial year, with no lump sum withdrawals permitted. This can be in an annual payment, or you could have the payments structured similarly to your salary that being fortnightly or monthly.

Should you change your mind or decide to return back to full-time work, you have the ability to add the current balance back into accumulated superannuation account at any given time.

How much income you want will depend on the amount you transfer. So, it is able to remain open and have the ability to pay any insurance premiums and be able to receive ongoing personal or employer contributions, you will need to leave enough in your accumulation account.

The employer contributions can continue to be paid into the existing superannuation account since you are still working, and your income payments will be paid directly into your bank account.

When you get to the age of 60, you will receive tax free payments from the income stream.

These types of income streams are ideal for someone who is looking or needs to top up their income or looking at transitioning from full-time to park-time work.

In addition, this is also used to recycle the funds back in a tax-effective way and to repay debt faster.

These funds are, in turn, able to then be converted in to a regular income system once you reach the age of 65 or fully retire. No maximum withdrawal limit is applied or simply cashed out.

If you require help with understanding what’s best for you, the team at Superannuation Advice Australia can help.  Contact us today!

Leave a comment