Transition to Retirement (TTR) in Plain English

What a TTR pension is

A TTR pension lets you move some of your super into a special pension account and draw an income from it once you reach your preservation age, even if you're still working. The remainder stays in accumulation.

Annual drawings sit between a minimum (a percentage of the TTR balance, based on age) and a maximum (commonly 10% of the TTR balance per year). Unlike a standard account-based pension, lump-sum withdrawals are generally not permitted while the TTR is in 'pre-retirement' (non-retirement phase).

Who a TTR might suit

TTR strategies are often considered by people who want to:

What to understand before starting one

Eligibility. You must have reached your preservation age. The preservation age depends on date of birth — confirm yours with the ATO.

Tax treatment. Investment earnings inside a TTR in pre-retirement phase are generally taxed similarly to accumulation accounts (not tax-free). Income payments may have different tax treatment depending on your age.

Fees. Holding both an accumulation and a TTR pension account means two sets of fees may apply. Check the PDS.

Insurance. Moving money out of accumulation can sometimes affect insurance cover attached to that account.

Long-term balance. Drawing income from super while still working reduces the balance available for full retirement, unless it's replaced by contributions.

Once you fully retire

When you meet a full condition of release (commonly retirement after preservation age, or turning 65), a TTR can usually convert to a standard account-based pensions, which has different tax and access rules and no maximum drawdown.

Where TTR fits in a wider plan

TTR is one tool among many. It interacts with tax in retirement, the Age Pension and your investments (once you reach pension age), and your overall retirement income options mix. Before starting or stopping one, it's worth a written cash-flow and tax analysis. Our questions to ask before investing checklist can help.

For a calm written overview of how the pieces fit, you can request your information pack.

Common situations where people consider a TTR

Easing into part-time work. Someone in their early 60s who wants to drop from five days a week to three or four often uses a TTR pension to replace some of the lost wages. The goal is usually lifestyle — more time with family, gradual wind-down — rather than a tax outcome.

Topping up super while still working full time. Some workers use a TTR alongside salary-sacrifice contributions. The idea is that pre-tax salary goes into super (taxed concessionally) while TTR pension payments replace that take-home pay. Whether this leaves you better off depends on your marginal tax rate, fund fees, contribution caps and current tax rules, so personal advice matters.

Bridging a planned career change. A TTR can smooth cash flow for someone moving from higher-paid work to lower-paid but more enjoyable work in the years before full retirement.

In every case, the benefit is specific to the individual. A TTR that looks attractive for one person can be neutral — or net-negative — for another, particularly once fees on two super accounts and any insurance changes are taken into account.

Questions to ask before starting or stopping a TTR

Before starting a TTR it is worth getting written answers to a few questions: What are the total annual fees across both the accumulation and TTR accounts in dollars? How does the strategy change if I take more or fewer hours? What happens to any insurance I currently hold inside super? How will my employer's contributions continue to be paid? And what would trigger stopping the TTR — for example, a change in tax rules, fees, or my employment situation?

When you eventually meet a full condition of release, your fund can usually convert the TTR into a standard account-based pensions. That conversion changes the tax treatment and removes the annual maximum drawdown, but it is not automatic — you generally need to notify the fund. Building that step into the plan from the start avoids confusion later.

Confirm any specific figures or current rules with the ATO or Moneysmart before acting.