A transition to retirement (TTR) pension provides you with the ability to withdraw from your super without having to give up work. So, essentially you can reduce your working hours while taking home the same income.1
And the benefits don’t end there.
To commence or hold a TTR you will need to be over age 60 and any money you withdraw from your super is usually tax-free.
Sound good?
Before you decide if this is the right option for you, here are a few things to note.
Earnings on the amounts set aside in super to fund TTR pensions are subject to 15 per cent tax2. It’s worthwhile considering whether a TTR strategy is appropriate for your circumstances, especially when combined with further limitations on how much you can contribute to super.
It’s important to note though, the tax you pay on investment earnings outside super may be higher3 so there’s still potentially a benefit here.
One of the extra steps some people with a TTR pension can take is to make additional contributions to their super using their before-tax income. This helps to reduce their taxable income, but it also reduces their take home pay. By using the income from their TTR pension, they’re able to supplement it so they’re not losing out.
What about if you decide to continue working full time and are unable to make additional contributions to your super?
Well, receiving an income from a TTR pension may still be handy for other purposes. For example, paying off non-deductible debt such as a home loan or credit cards, could lessen your financial burden or better still, completely remove it by the time you retire.
There are a few conditions attached to TTR pensions if you choose to take it on.
To be eligible for a TTR, you must have reached age 60.
The second condition is that you can only access your super in the form of an income stream, drawing between 4 per cent and 10 per cent each financial year5.
This means you can’t access any of your super as a lump sum. All of that changes however, once you meet a standard requirement to access your super, such as completely retiring or turning 65.
Let’s face it, your retirement years shouldn’t be trying times – they should be enjoyed.
So, the best way to maximise the benefit of a TTR pension is to start planning early. The more you can save in super, the better opportunities you’ll have in retirement.
A TTR pension is an option may allow you to have more flexibility with your work hours while potentially boosting your super and cutting down your tax. It can be complex though, so you may want to consider discussing your options with your financial adviser.
1. https://moneysmart.gov.au/retirement-income/transition-to-retirement
2. https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/super/withdrawing-and-using-your-super/retirement-withdrawal-lump-sum-or-income-stream
3. https://moneysmart.gov.au/how-to-invest/investing-and-tax
4. https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/super/withdrawing-and-using-your-super
5. https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/super/withdrawing-and-using-your-super/retirement-withdrawal-lump-sum-or-income-stream
Thinking about retirement, but not sure where to start? Get tips and information in our Planning for Retirement guide, to help you get started today.
Things you should know
Information current as at 1 July 2025. The article was prepared by BT, a part of Westpac Banking Corporation ABN 33 007 457 141 AFSL and Australian Credit Licence 233714 (Westpac). This information does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness, having regard to these factors before acting on it. This information provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such.
This information may contain material provided by third parties derived from sources believed to be accurate at its issue date. While such material is published with necessary permission, the Westpac Group accepts no responsibility for the accuracy or completeness of, nor does it endorse any such third party material. To the maximum extent permitted by law, we intend by this notice to exclude liability for this third party material.
Superannuation is a means of saving for retirement, which is, in part, compulsory. The government has placed restrictions on when you can access your investments held in superannuation. The Government has set caps on the amount of money that you can add to your superannuation each year and over your lifetime on both a concessional and non-concessional tax basis. There will be tax consequences if you breach these caps. For more detail, speak with a financial adviser or registered tax agent or visit the ATO website.