Transition to Retirement pension
If you’ve reached your preservation age but are still working, the Club Plus Super Transition to Retirement (TTR) Pension allows you to take advantage of TTR rules, so you can access your super while you’re still working. Once you start a Transition to retirement pension, a minimum amount is required to be paid each year. There is also a maximum amount that can be paid each year, which is 10% of your account balance at 1 July each year.
There are two ways that you can benefit from TTR:
Peter is aged 55 and has accumulated $252,000 in his super account. He is fit and healthy and intends to continue full-time work for several years, aiming to maximise the amount of savings in his Club Plus Super fund ahead of retirement.
After receiving advice he decides to commence a Club Plus Super transition to retirement pension account with $250,000 (leaving $2,000 in his super account), and chooses to receive the allowed maximum $25,000 (10% of his account balance) for the first year taken as a monthly pension paid into his bank account. With this extra monthly income Peter can now afford to salary sacrifice a large amount of his regular pay into his Club Plus Superannuation account. This has the effect of significantly reducing his taxable income, and as a result he contributes several thousand dollars more to his super fund than he could previously afford, whilst having the same take-home income.
Simply by transferring his funds into a Club Plus Pension account Peter saves tax, because investment earnings in the pension account are tax-free. Also, he is Salary Sacrificing into super reducing his taxable income and paying only 15% tax on this amount rather than his marginal tax rate.
Jane is 57 years of age and works 40 hours a week at a club. She has decided she wants to retire but would still like to work 3 days a week. As all of her superannuation with Club Plus Super is preserved Jane is unable to access any of her funds whilst she continues to work.
Jane decides to transfer her accrued superannuation with Club Plus Super into the Transition to Retirement Pension. She will be able to receive payment for the 3 days that she works and supplements her income with the twice a month payments from her Club Plus Pension. Until Jane meets a condition of release, she is only able to receive payments by way of her pension payments. After meeting a condition of release, she would be able to take part of her benefit as a lump sum if she wished.
For example, if Jane decided to fully retire from her job at age 62, the maximum drawdown restriction would be removed, allowing her to take the full amount if she wished.
To fully understand how Transition to Retirement may be beneficial for you, it is advisable to see a Financial Planner.
For more information about Club Plus Super’s Transition to Retirement Pension, please download the Pension PDS and the Transition to Retirement Factsheet, or contact our Pension Hotline on 1800 204 194, Monday to Friday from 8am to 6pm AEST. Alternatively, submit an enquiry.
Preservation age table
|Date of birth||Preservation age|
|Before 1 July 1960||55|
|1 July 1960 - 30 June 1961||56|
|1 July 1961 - 30 June 1962||57|
|1 July 1962 - 30 June 1963||58|
|1 July 1963 - 30 June 1964||59|
|From 1 July 1964||60|
Commonwealth Government Minimum Pension Payment Limits
|Age||Legislated Minimum Percentage||Minimum Percentage 1 July 2011 - 30 June 2012|
|95 or older||14%||10.5%|
Temporary relief of minimum pension drawdown rules
Please note: On 30 June 2011, the Federal Government extended the relief from the minimum pension draw down rules until the start of the 2012/13 financial year. The minimum draw down percentages as seen above have now been given a 25% reduction, so for example, a 64 year old would be required to draw 3% of their account balance as a minimum pension payment instead of the standard 4%.