A great strategy for those moving towards retirement can be a Transition to Retirement Pension (TRIP). One of the more popular TRIP strategies is to salary sacrifice into your super fund up to your concessional (tax deductible) contributions cap, and replace that income that you have salary sacrificed, with tax-free (if you are over 60) or concessionally taxed pension payments (if you under 60). This strategy can increase your superannuation balance and reduce your tax payable.  How you effectively structure this will depend on your current tax level, your age, your current superannuation balances and your current income needs.

Here are some common questions we often are asked:

 How old do I need to be?

You must have reached preservation age (that is, the minimum age that you can access your super — currently 55 for those born before 1st July 1960), you can then start a transition-to-retirement pension (TRIP) and continue to work, and continue making super contributions. The preservation age increases for those born after 1 July 1960 every year by a year, and for those born after 30 June 1964 it is now 60 which the maximum preservation age.

 What are the tax savings?

Any earnings on investments that are converted to your pension account to fund your Transition to Retirement Pension are tax free , including capital gains on any assets sold.

If you are over 60 your TRIP will be tax-free to you, and if you are under 60 it will be taxed but you will receive a tax offset of 15%.

How much can I withdraw each year?

You must withdraw a minimum amount of 4% and a maximum amount of 10% of your pension account balance each year. For example, if the account balance of your TRIP is $400,000 on 1 July, then you can withdraw no more than $40,000 (10% of $400,000)  for the year, but you must draw at least  $16,000 (4% of $400,000)

Can I draw a lump sum payment?

No. You cannot draw a lump sum until you either retire or reach the age of 65. With the exception of drawing your transition to retirement pension as a lump sum (up to 10% of your account balance).

How does it work in practice?

See the money smart website link below for a case study:


Do all funds offer transition to retirement pensions?

Not all super funds offer transition-to-retirement pensions. You will need to check with your current super fund whether you are able to utilise this pension option. And if you have your own Self Managed Superfund you will need to check the trust deed to make sure the Deed permits TRIP

This information is general information only. You should consider the appropriateness of this information with regards to your objectives, financial situation and needs.