If you are aged 55 or older you can access part of your superannuation through a Transition To Retirement Pension (TTRP). You can couple this pension with salary sacrifice contributions into your accumulation superannuation (pre income tax contributions).
A TTR strategy allows you to:
- Pay less tax
- Retire with more
- Take home the same pay
If you are aged between 55 -59, the drawings from the pension are taxed at your marginal tax rate minus a 15% offset, (Any drawing from a tax-free component are tax free). Once you are aged 60+ all drawings from the TTRP are tax free.
This strategy is particularly beneficial if you earn over $40,000 income p.a and have a super balance of over $100,000.
Additional benefits are; investments within a TTRP do not attract any income or capital gains tax, as opposed to the 15% income and 10% capital gains tax applied during accumulation phase. The pensions cannot be added too, but can be “refreshed” to top up any accrued savings in the accumulation phase.
The main rule is that you must draw at least 4% of the balance and you cannot draw more than 10% of the balance each financial year. Depending on your individual trust deed, a SMSF can generally operate a TTRP.
If you would like more information, or want to discuss how you can take advantage of a TTR strategy call us on 1300 266 905.
Brendan Cairns
Authorised Representative of AMP Financial Planning Pty Limited
