Taking a Pension or a Transition to Retirement Income Stream

As you near the end of your working career it comes time to consider how you want to support yourself in retirement. By reaching your preservation age, you are entitled to a transition to retirement income stream (TRIS) if you are still working, or an account based pension (ABP) if you have stopped working permanently.

What is my preservation age?

Currently, a person’s preservation age ranges from 55 to 60, depending on when the

person was born:

Differences between a TRIS and an ABP

Both income streams require a minimum pension be paid based on a scaling percentage of the member balance held by a superannuation fund. This amount starts at 4% for people under 65 all the way up to 14% for those aged 95+

A TRIS can be setup from any time after reaching preservation age, with a maximum withdrawal of no more than 10% of the super balance. A TRIS allows a member to continue working while supplementing their income with super, this would allow you to scale back your work hours, or if you choose to continue working full time other tax advantages may be available to you.

An ABP can be setup upon meeting a condition of release. The most common conditions being retiring permanently from the workforce upon reaching your preservation age, or reaching age 65. While an ABP allows you withdraw any amount from your superannuation, as you must be retired from the workforce this is not an unlimited resource.

Regardless of how you elect to receive an income stream, your superannuation must be carefully managed to ensure that you have sufficient funds to live the retirement you desire without running out. With the Government Age pension age increasing to 67 by 1 July 2023 and subject to the passage of legislation the pension age will increase further to 70 by 1 July 2035, it is more important than ever for you to discuss with your financial adviser before you retire, in fact the earlier this discussion is held the more time available to you to make changes in order to create the retirement you desire, as there is no guarantee that in the event your superannuation runs out that there will be Government policy in place to support your retirement.

If you would like to discuss the transition to retirement and matters relating to it, please contact us on 03 9603 0066.