Transition to Retirement (TTR) Calculator Australia 2025-26: How the Strategy Works
A Transition to Retirement (TTR) pension is one of Australia's most powerful superannuation strategies for people approaching retirement. It lets you access some of your super while you're still working — either to supplement a reduced salary or to boost your retirement savings through salary sacrifice. This guide explains how TTR works, the tax rules for FY 2025-26, and how to decide if it's right for you.
💡 Key Takeaway
If you've reached your preservation age (55–60 depending on your birth date) and are still working, a TTR pension allows you to withdraw up to 10% of your super balance each year. The pension payments you receive are taxed at your marginal rate, but you get a 15% tax offset on the taxable component. Many Australians use TTR to reduce work hours or make extra salary sacrifice contributions while maintaining their take-home pay.
What Is a Transition to Retirement Pension?
A Transition to Retirement (TTR) pension, also called a transition-to-retirement income stream (TRIS), is a type of superannuation income stream that you can start after reaching your preservation age, even if you haven't retired. It was introduced by the Australian Government to give older workers more flexibility in how they transition from full-time work to full retirement.
The key difference between a TTR and a regular retirement pension is that with a TTR, you're still working. You can draw an income from your super while continuing to contribute to it through your employer's Superannuation Guarantee and any voluntary salary sacrifice arrangements.
Unlike a standard pension once you fully retire, a TTR pension has a maximum annual withdrawal limit of 10% of your account balance. This restriction ensures your super lasts through your retirement years. There is no minimum withdrawal limit — you can choose how much income to draw, up to the 10% cap.
| Feature | TTR Pension | Retirement Pension (Account-Based) |
|---|---|---|
| Employment status | Still working | Retired (met a condition of release) |
| Maximum withdrawal | 10% of balance per year | No maximum |
| Minimum withdrawal (under 65) | 2%–4% (age-based percentage) | 4%–5% (age-based percentage) |
| Tax on investment earnings | 0% (exempt, like retirement phase) | 0% (exempt) |
| Tax offset on payments | 15% offset on taxable component | Tax-free if over 60 |
| Can make contributions | Yes (employer + voluntary) | Limited (subject to work test rules) |
Who Is Eligible for a TTR Pension?
To start a TTR pension, you must have reached your super preservation age — the minimum age at which you can legally access your superannuation. Your preservation age depends on your date of birth, as shown in the table below.
| Date of Birth | Preservation Age | Eligible for TTR? |
|---|---|---|
| Before 1 July 1960 | 55 | ✅ Yes |
| 1 July 1960 – 30 June 1961 | 56 | ✅ Yes |
| 1 July 1961 – 30 June 1962 | 57 | ✅ Yes |
| 1 July 1962 – 30 June 1963 | 58 | ✅ Yes |
| 1 July 1963 – 30 June 1964 | 59 | ✅ Yes |
| On or after 1 July 1964 | 60 | ✅ Yes |
You must also be still employed (full-time, part-time, or casual) to start a TTR. If you've already retired and met a full condition of release, you don't need a TTR — you can start a standard retirement pension with no withdrawal limits.
How TTR Pension Payments Are Taxed
TTR pension payments are treated differently from regular retirement pension payments for tax purposes. The tax treatment depends on your age and the components of your super balance.
If you're under 60, your TTR payments are divided into:
- Tax-free component — made up of non-concessional (after-tax) contributions. This is paid tax-free.
- Taxable component (taxed element) — made up of employer contributions and salary sacrifice contributions. This is included in your assessable income, but you receive a 15% tax offset on this amount.
If you're 60 or over, TTR pension payments are tax-free — regardless of the component. This is the same treatment as a standard account-based pension in retirement phase.
| Age | Tax on TTR Payments | Tax Offset |
|---|---|---|
| Under preservation age | N/A — not eligible for TTR | — |
| Preservation age to 59 | Marginal rate on taxable component | 15% offset on taxable component |
| 60 and over | Tax-free | Not needed (already tax-free) |
Two Common TTR Strategies
Most Australians use TTR in one of two ways, depending on their financial goals.
Strategy 1: Reduce Work Hours
You want to work part-time but can't afford the pay cut. A TTR pension supplements your reduced salary. For example, if you drop from full-time ($120,000) to 3 days a week ($72,000), you might draw $30,000–$40,000 from your TTR to maintain your lifestyle. The TTR income is taxed at your marginal rate (with the 15% offset), but your overall tax bill may still be lower because your total income is spread across a salary and a super pension.
Strategy 2: Boost Super with Salary Sacrifice
You want to maximise your super but still need cash flow. You use a TTR to draw income from your super while simultaneously salary sacrificing a large portion of your salary into super. This is known as a "recontribution strategy" — the TTR payments replace your reduced take-home pay, while extra contributions grow your super balance with the benefit of 15% tax (instead of your marginal rate). You can use our Salary Sacrifice Calculator to model how this works.
TTR and Contribution Caps
While receiving a TTR pension, you can still make contributions to super, subject to the usual caps. Here's what you need to know for FY 2025-26:
- Concessional (before-tax) cap: $30,000 per year — includes employer Superannuation Guarantee and salary sacrifice contributions.
- Non-concessional (after-tax) cap: $120,000 per year — or up to $360,000 over three years using the bring-forward rule if you're under 75.
- Employer Super Guarantee: Your employer must still pay 12% SGC on your salary — TTR doesn't change this obligation.
- Work test: If you're under 75, there is no work test for contributions. If you're 75 or over, you generally can't make voluntary contributions.
One of the key advantages of a TTR is that the investment earnings in the TTR pension account are tax-free (0% tax rate), compared to an accumulation account where earnings are taxed at 15%. This makes TTR an attractive option for holding assets that generate high income, such as rental property investments or high-yield shares.
How to Start a TTR Pension
Starting a TTR pension is relatively straightforward but requires a few steps:
- Check your preservation age — confirm you've reached the right age based on your date of birth.
- Talk to your super fund — most industry and retail super funds offer TTR products. Some have specific requirements or minimum balance thresholds.
- Open a TTR account — your super fund will roll part or all of your accumulation balance into a TTR pension account. You choose how much to transfer.
- Choose your income stream — set a regular payment amount (e.g., monthly, quarterly). Stay within the 10% maximum annual withdrawal limit.
- Review your strategy annually — check that your TTR still aligns with your goals, especially as you approach age 60 when payments become tax-free.
Use our Take-Home Pay Calculator to compare your current salary with a reduced-hours scenario supplemented by TTR income. You can also check your Income Tax rates to understand how the 15% tax offset will reduce your tax bill.
TTR and the Age Pension
One important consideration is how a TTR pension affects your eligibility for the Age Pension. The Age Pension is means-tested — both an income test and an assets test apply. A TTR pension account is assessed as an asset by Centrelink, and the payments you receive count as income.
Once you reach Age Pension age (currently 67 for those born on or after 1 January 1957), the TTR pension converts to a standard retirement pension. At that point, you may be able to adjust your drawdown strategy to optimise Age Pension entitlements. Our Age Pension Calculator can help estimate your potential Age Pension payments.
Frequently Asked Questions
Can I start a TTR pension if I'm self-employed?
Yes, self-employed individuals can start a TTR pension as long as they have reached preservation age and are still working (i.e., earning income from self-employment). The same rules apply regarding the 10% withdrawal limit and the 15% tax offset for those under 60.
What happens if I exceed the 10% withdrawal limit?
If your TTR pension payments exceed 10% of your account balance in a financial year, the excess amount is treated as a lump sum withdrawal. This may trigger different tax treatment and could have implications for your superannuation strategy. Your super fund should monitor this for you, but it's important to keep track yourself.
Can I roll my TTR back into an accumulation account?
Yes, you can stop your TTR pension at any time and roll the balance back into an accumulation account. This could make sense if you decide you no longer need the extra income or want to simplify your super arrangements. There are no penalties for doing so.
Does a TTR affect my HECS-HELP repayment?
Yes — TTR pension payments count as income for HECS-HELP repayment purposes. If you have a HECS-HELP debt, your TTR income will be added to your salary and other income to determine your total repayment income. If this pushes you above the $67,000 repayment threshold, you'll need to make compulsory HECS repayments.
Is a TTR pension worth it if my super balance is small?
A TTR is most effective when your super balance is large enough to generate meaningful income. If your balance is small, the 10% withdrawal limit may not provide enough extra income to justify the administrative complexity. A good rule of thumb is to consider a TTR if your super balance is at least $100,000–$200,000, but you should speak to a financial adviser to assess your situation.
What changes are coming to TTR rules after FY 2025-26?
As of June 2026, the 10% maximum withdrawal limit remains in place for TTR pensions. There have been discussions about potential reforms, but no major legislative changes affecting TTR have been announced for FY 2026-27. Always check the ATO website or consult a qualified adviser for the most current information.