A transition to retirement income stream, universally shortened to TTR, lets you draw a limited income from your superannuation while you are still working, once you have reached your preservation age.
It exists to solve a specific problem. Historically, superannuation was locked until you stopped working entirely, which discouraged people from reducing their hours gradually. A TTR pension allows you to move to part-time work and supplement the lost income from your own super, rather than facing a cliff edge between full-time work and full retirement.
Two things distinguish a TTR from a standard account-based pension. You must draw at least the minimum each year, and you may not draw more than a capped maximum percentage of the balance. You also generally cannot take lump sum withdrawals from a TTR pension, only regular income payments.
The strategy that made TTR widely discussed is not about reducing hours at all. It works like this, for someone still working full time.
The net result is that a portion of your income has been rerouted through the superannuation system, taxed at the concessional contributions rate on the way in rather than at your marginal rate, while your cash position in hand remains roughly unchanged.
The strategy is meaningfully weaker than it once was. Earnings inside a TTR pension are no longer tax exempt in the way they were before the 2017 superannuation reforms — they are taxed like earnings in the accumulation phase. That change removed a substantial part of the original benefit.
The tax outcome depends heavily on your age.
From age 60, TTR pension payments from a taxed source are generally received tax free and do not need to be included in your assessable income.
Between preservation age and 60, the taxable component of TTR pension payments is included in your assessable income and taxed at your marginal rate, though a tax offset generally applies to the taxable component. The tax-free component is not taxed. This makes the strategy considerably less attractive before 60 than after it.
Earnings on the assets supporting a TTR pension are generally taxed at the same concessional rate as accumulation phase earnings. They do not receive the tax exemption that applies to assets supporting a retirement phase pension. This is the change that reshaped the strategy.
Once you meet a full condition of release — for example, retiring, or turning 65 — a TTR pension can generally convert to a retirement phase income stream, at which point the earnings exemption applies and the maximum drawdown cap falls away.
Because minimum and maximum percentages, and the treatment of the first year, can be adjusted by regulation, confirm the current figures with the ATO or your fund before relying on them.
Honestly, less often than it once was, and it depends on a small number of specific factors.
It tends to help where you are 60 or over, on a marginal tax rate meaningfully above the concessional contributions rate, still working, and have sufficient super to support the pension without eroding the balance you will need in retirement.
It tends not to help where you are below 60, where your marginal rate is close to the concessional contributions rate, where your balance is modest, or where the additional fees of running a second account outweigh the tax saved.
It always carries a cost. Drawing from your balance while still working reduces the capital compounding toward your retirement. The strategy is a tax arbitrage, not free money, and it consumes the very asset it is meant to build.
Genuine reasons to start a TTR pension include reducing your working hours and needing to replace income, or bridging a period before full retirement. Using it purely as a tax strategy warrants careful modelling of the numbers against the fees and the foregone compounding.
A transition to retirement pension does what its name says: it lets you access some superannuation while still working, once you reach preservation age. Its original purpose was to make part-time work before full retirement financially viable, and it still serves that purpose well.
As a pure tax strategy it is considerably weaker than it was before 2017, because earnings supporting a TTR pension are no longer tax exempt. Whether it is worthwhile now depends on your age, your marginal rate, your balance, and the fees involved. The interaction between contribution caps, preservation rules, and tax is genuinely complex — obtain personal advice from a licensed financial adviser before starting one.
What is a Transition to Retirement income stream?
A Transition to Retirement (TTR) pension allows you to draw an income from your super once you reach preservation age (60 for most people), even while you continue working. You can withdraw between 4% and 10% of your account balance each year. Unlike a retirement pension, a TTR account cannot be commuted (converted to a lump sum) while you are still working.
What are the tax benefits of a TTR strategy?
A TTR pension income stream is taxed at your marginal rate with a 15% tax offset for those aged 60-64. From age 60, TTR pension payments are completely tax-free. The strategic benefit is that a TTR used in conjunction with salary sacrifice allows you to maintain the same take-home pay while boosting your super contributions significantly - converting income taxed at your marginal rate to super contributions taxed at 15%.
Is TTR still worth it in 2025-26?
TTR is less advantageous than before 2017 - investment earnings on TTR accounts are now taxed at 15% (they were previously tax-free). The main remaining benefit is the salary sacrifice strategy to boost super contributions while maintaining income. TTR is most beneficial for those aged 60 and over where pension payments are tax-free, those on 37% or 45% marginal rates, and those with a meaningful balance to draw from.
What is the minimum and maximum drawdown from a TTR pension?
The minimum annual drawdown from a TTR pension is 4% of your account balance (rising to higher percentages at older ages). The maximum is 10% - this cap prevents TTR from being used as a tax-free income source in place of retirement. The drawdown is calculated at 1 July each year based on your balance on that date.
Illustrative. The same annual contribution started fifteen years earlier has fifteen extra years of earnings compounding on top of it.