A Transition to Retirement (TTR) pension — also called a Transition to Retirement Income Stream (TRIS) or TTRP — allows you to access your super as a regular income stream once you reach preservation age, even if you haven’t retired. It’s primarily used by people aged 60+ who are winding down to full retirement or reducing their working hours.
How TTR Works — The Basics
When you start a TTR pension, your super fund converts some or all of your accumulation balance into a pension account. You draw regular payments from this account, while the remaining balance stays invested.
Key rules:
| Rule | Detail |
|---|---|
| Minimum annual drawdown | 4% of the account balance each year |
| Maximum annual drawdown | 10% of the account balance each year |
| Lump sum withdrawals | Not permitted under TTR (only income stream payments) |
| Earnings tax rate | 15% (same as accumulation phase — not tax-free) |
| Who is eligible | Anyone who has reached preservation age (60 for those born after 30 June 1964) |
| Employment required? | No — you can be working full-time, part-time, or not at all |
Who TTR Was Designed For
TTR was introduced in 2005 to help people transition gradually into retirement — hence the name. The original use cases were:
- Reduce working hours without losing income: Draw TTR pension payments to supplement reduced wages as you wind down to full retirement
- Salary sacrifice and TTR combination: Some used TTR income to replace take-home pay while salary sacrificing more into super — with the aim of maintaining living standards while boosting the super balance. The 2017 changes (see below) reduced the tax benefit of this strategy for many people.
Tax Treatment Under TTR
Investment Earnings
Before 1 July 2017, investment earnings in a TTR account were completely tax-free (the same as retirement phase). After 1 July 2017, this changed — earnings in a TTR account are now taxed at 15%, the same as in an accumulation account.
This change significantly reduced the appeal of TTR-plus-salary-sacrifice strategies, which previously generated a tax arbitrage on investment returns.
Pension Payments Received by You
| Your Age | Tax on TTR Payments |
|---|---|
| Under 60 | Included in assessable income, with a 15% tax offset on the taxable component |
| 60 and over | Completely tax-free |
For most people who start a TTR at age 60 or over, the income received is tax-free. This makes TTR most beneficial for those who are already 60.
When TTR Makes Practical Sense
At Age 60, Working Part-Time
If you have reduced your work hours at 60 and your salary no longer covers your living expenses, a TTR pension can top up your income with tax-free payments — without needing to fully retire.
Example: Sarah is 62, works three days per week, and earns $40,000 per year from employment. Her super balance is $450,000. She starts a TTR and draws $20,000 per year (approximately 4.4% of her balance). Her combined income is $60,000. The $20,000 TTR payment is entirely tax-free. She does not need to access her full super balance or formally retire.
As a Bridge to Full Retirement
TTR can bridge the period between leaving full-time work and meeting the full retirement condition of release. Once you fully retire (cease all employment), your TTR account can be converted to a retirement phase pension — at which point earnings become tax-free.
What Happens When You Fully Retire?
When you meet the full retirement condition of release (generally ceasing all employment arrangements), your TTR income stream can be converted to a standard retirement phase account-based pension. Once converted:
- Investment earnings become tax-free
- The 10% drawdown cap no longer applies (you can draw any amount)
- Lump sum withdrawals are permitted (subject to the transfer balance cap)
This conversion is a key step for many retirees — it’s worth notifying your fund when you fully retire, as the tax treatment of your account improves immediately.
TTR and the Transfer Balance Cap
The Transfer Balance Cap (TBC) limits how much you can transfer into the tax-free retirement phase. In FY2025–26 the cap is $2.0 million.
A TTR account is not counted against the transfer balance cap — it remains in accumulation-equivalent tax treatment. Only when you convert the TTR to a retirement phase pension does it count toward your personal transfer balance cap.
Is TTR Still Worth It?
The 2017 changes removed much of the mathematical advantage of the salary sacrifice + TTR arbitrage strategy. Whether TTR is still beneficial depends on your individual circumstances:
TTR may still be useful if:
- You are aged 60+ and receiving tax-free income that fills an income gap while working reduced hours
- You are in the transition period before full retirement and want a structured drawdown
- You want flexibility to draw some super income without fully retiring
TTR is unlikely to help if:
- You are under 60 (payments are assessable income; benefits limited)
- You are on a high income and don’t need to supplement wages
- You are not close to retirement and are simply looking for an investment tax break (the 2017 rule change eliminated the earnings tax benefit)
How to Start a TTR Pension
- Check eligibility: You must have reached preservation age (60 for those born after 30 June 1964)
- Contact your fund: Request information on their TTR product — most large industry funds offer an account-based TTR pension
- Decide the drawdown amount: Between 4% and 10% of your account balance per year; choose a frequency (monthly, quarterly, etc.)
- Choose your investment option: Funds often allow you to choose a separate investment option for your TTR account vs your accumulation account
- Complete the application: Your fund will process the conversion and begin payments
Frequently Asked Questions
Can I withdraw a lump sum from my TTR account? No. Under TTR rules, you can only receive income stream payments — not lump sums. If you need a lump sum, you would need to fully meet the retirement condition of release or wait until age 65, at which point all super becomes accessible.
Does TTR affect my Age Pension? TTR pension payments may count as assessable income in the Age Pension income test once you reach pension age. The TTR account balance also counts in the assets test from pension age. This is a complex area — see Super and Centrelink for more.
Can I have a TTR and still contribute to super? Yes. You can continue making contributions to your accumulation account (subject to the usual contribution caps) while drawing a TTR pension from a separate pension account. Many people continue receiving employer SG contributions into their accumulation account while drawing TTR payments.
What happens to the TTR account when I turn 65? At age 65, all super becomes unrestricted non-preserved regardless of employment status. You can convert the TTR to a full retirement phase pension (earning tax-free returns), or withdraw as a lump sum, or continue drawing as an income stream with no cap.
See also: Accessing Your Super. For advice tailored to your situation, speak with a licensed financial adviser. You can find one through the ASIC financial advisers register or MoneySmart.