Transition to retirement pensions – back to their true purpose

• Having a clear objective of the purpose of maintaining a TTR or setting one up in your fund. Without the tax exempt status TTRs are no longer a ‘no-brainer’ in garnering tax concessions for your finances.
• TTRs are still useful to help you:
  • Cut back on work hours and supplement your income with pension payments as you move towards retirement.
  • Increase your income with pension payments while you continue in the workforce until a full condition of release is met.
  • Reduce your taxable income and increase your superannuation balance without effecting your take home pay through a salary sacrifice arrangement.
• Reviewing your situation to determine if you have met or soon will be eligible to start an account based pension (which has tax-free earnings) instead of a TTR.
• Ensuring that a condition of release (an event that allows you to access your super) has been met which allows a TTR to be commenced.
• Determining your eligibility and capacity to make salary sacrifice or deductible contributions pre and post 1 July 2017 will assist in a decision to start or maintain a TTR.

Transition to retirement pensions must still meet the current pension minimum standards beyond 1 July 2017. This means a minimum pension withdrawal of 4% and a maximum pension withdrawal of 10% of your TTR balance.

Transition to retirement pensions will also potentially have access to the transitional capital gains tax relief for superannuation assets affected by the new rules starting on 1 July 2017. This capital gains relief will ensure that any capital gain on affected superannuation assets will be disregarded or deferred to a later time when the asset is sold. This is a complex area of law that we encourage you to discuss with us with regards to your TTR in detail.