Prepare for retirement with an income supplementing solution
If you are over preservation age and still working, you may not have full access to superannuation but may be able to start an account-based pension under the Transition to Retirement (TTR) rules. A TTR pension may also be referred to as a Transition to Retirement Income Stream, or TRIS.
Once a person reaches 65 or informs their super fund that they have met a condition of release before turning 65, their TTR pension becomes a ‘TTR pension in retirement’. This means their pension is subject to the same conditions that apply to an account-based pension.
The person can select how much income to receive each financial year. This allows flexibility to meet individual needs. The only rules for how much pension must be taken are:
For a TTR pension, the maximum income is 10% of the account balance and no lump sum withdrawals can be made.
The pension will cease when the account balance reduces to nil, or the person requests the money be rolled back to accumulation phase or another pension account. The pension can be commuted (stopped) at any time with the money rolled back to accumulation. Withdrawals cannot be made in cash unless a condition of release has been met.
Every withdrawal (income or lump sum or death benefit) from a pension is split into taxable and tax-free components in the same ratio that applied when the pension commenced. The tax on each component depends on the person’s age and you should refer to the relevant government resources to confirm this. Otherwise, discussing this with your financial planner would help to clarify any questions you may have.
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