Ease into retirement with a Transition-to-Retirement pension
If you’re still working and are getting close to retirement, you can start to take advantage of a Transition-to-Retirement (TTR) pension with Kinetic Smart Pension.
A TTR pension can be established by transferring some of your retirement savings from your super account. Since you're still working, you need to ensure that your super account remains open after the transfer, so future contributions from your employer can continue to be paid into your super account.
Benefits of a TTR
- Cut back on your working hours without reducing your income - Access your super by commencing a regular income stream to supplement your reduced salary.
- Boost your super as you approach retirement by reducing your income tax -You can receive some tax benefits by salary sacrificing part of your income into super while you’re still working and commence a regular income stream to replace your reduced salary.
It’s important to remember that TTR pensions are not considered a ‘retirement phase’ pensions. This means TTR pensions are subject to tax on investment earnings up to 15%.
However when you turn 65 years of age (or notify us confirming you have met another condition of release), your TTR account will automatically convert to a standard Account-based pension (referred to as a ‘retirement phase’ pension), which is exempt from tax on any investment earnings, unless you instruct us otherwise.
Open a TTR pension today!
If you’re an Australian citizen, New Zealand citizen or permanent resident of Australia and you’ve reached your preservation age, you can set up a Transition-to-Retirement pension today.
Your preservation age depends on your date of birth:
|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|
|After 30 June 1964||60|
The minimum amount to start a pension is $20,000.
How much can you receive as TTR income?
You can choose how much you’d like to receive (income) and how often you receive a payment (fortnightly, monthly, quarterly, bi-annually or annually), within legislated limits. These limits are set by the Government and are calculated based on your pension account balance and your age. The payment amounts must fall within the Government annual minimum and maximum limits.
This minimum payment amount is calculated by multiplying your Kinetic Smart Pension account balance at 1 July (or the commencement date of your pension) by an age-based percentage:
|Your Age|| |
Minimum Payment as a Percentage
of your Account at 1 July
|65 - 74||5%|
|75 - 79||6%|
|80 - 84||7%|
|85 - 89||9%|
|95 or over||14%|
The maximum amount you can withdraw is 10% of your account balance calculated on commencement of your pension and at 1 July each year.
Any withdrawals from your TTR account will usually be subject to the tax applicable to a pension payment, rather than the tax applicable to a lump sum benefit payment.
For example: John is 57 and has reached his preservation age. He will be commencing a pension with a $150,000 deposit. The minimum payment John can receive will be 4% x $150,000 = $6,000 per year. The maximum amount John can take is $15,000 per year (10% x $150,000).
Once John is aged 65, his TTR pension will convert to an Account-based pension.