Transition to Retirement

If you have reached your preservation age (currently 55), and wish to continue working, you will not have full access to your super – full access is only possible once you fully retire or reach age 65. However, you can access your super as an income stream.

The income stream must be a non-commutable income stream (meaning that you can not take lump sums from it). The most common form of this is an allocated pension. If an allocated pension is commenced, once you retire, or reach age 65, the income stream simply becomes a normal allocated pension.

Whilst the non-commutation restriction is placed on the transition to retirement income stream, you must draw annual payments of between 2 and 10 per cent of the account balance each year.

A transition to retirement pension can be used in a variety of strategies. It can be used to supplement your income if you decide to work part-time, or it can be a very effective tool even if you continue to work full time. A pension can be a more efficient way of generating an income than your salary or wage. This is because you can receive a 15 per cent rebate on the pension payments and the pension is completely tax-free over age 60.

If you have surplus income as a result of the pension payments, you can consider salary sacrificing a part of your salary into super.