The only requirement for a TRIS is age

A Transition to Retirement Income Stream (TRIS), also known as a Transition to Retirement (TTR), was introduced to help individuals gradually transition from full-time employment to retirement while maintaining their lifestyle as much as possible. With many Aussies living longer and current cost-of-living pressures, a TRIS is becoming increasingly popular.

A TRIS is purposely designed for people who have reached their preservation age but are not ready to fully retire. It can be particularly beneficial for:

• Individuals who want to reduce their working hours without reducing their income.
• People who are looking to boost their super balance before retirement.
• Higher-income earners seeking tax efficiencies.
• Workers who are planning a gradual transition into retirement rather than stopping work abruptly.

You do not need to meet all the conditions of release, such as retirement, to commence a TRIS. Reaching preservation age is sufficient.

When you start a TRIS, a portion of your superannuation balance is transferred from your accumulation account into a pension account. You can then receive regular income payments while continuing to work. The government sets both minimum and maximum withdrawal limits:

• Minimum annual withdrawal: 4% of the account balance for those under age 65.
• Maximum annual withdrawal: 10% of the account balance.

For example, if you transfer $400,000 into a TRIS:

• Minimum annual pension payment: $16,000
• Maximum annual pension payment: $40,000

These payments can be made monthly, quarterly, half-yearly or annually, depending on your needs.

To initiate a TRIS, the requirements are relatively straightforward:

• Reach your preservation age (currently 60 for most Australians).
• Have a superannuation balance available to transfer into the pension account.
• Be a member of a super fund that offers TRIS pensions.
• Complete the relevant application paperwork with your super fund or adviser.

The primary advantage of a TRIS is maintaining income while reducing time spent working. Most people entering a TRIS gradually reduce their 5-day work week to 4 or 3 days and replace the reduced income with payments from their superannuation. TRIS pension payments are generally tax-free when received from a taxed super fund. This can create opportunities to salary sacrifice additional income into super while replacing cash flow through pension payments.

Like any strategy, a TRIS must be right for the circumstances, and in some cases, it may not be the best option. Importantly, you are drawing funds from your superannuation to cover the reduced income from working less. Additionally, earnings on assets supporting a TRIS generally remain taxable within the fund at up to 15% until a full retirement condition of release is met, and there is the extra administration, although it is minimal, there is additional paperwork and ongoing monitoring to ensure minimum and maximum withdrawal requirements are met.

While there is no legislated minimum balance, a TRIS becomes more effective when there is enough capital to generate meaningful pension payments. As a general guide:

• Under $100,000 – Often provides limited benefits due to small withdrawal amounts.
• $200,000–$300,000 – May provide useful supplementary income.
• $400,000–$600,000+ Often allows greater flexibility and can support more sophisticated salary sacrifice strategies.
• $750,000+ Can provide significant income supplementation while maintaining strong retirement savings.

For example, someone with a $500,000 TRIS account could withdraw between $20,000 and $50,000 per year under current rules. The viability of a TRIS depends on several factors:

• Current salary and tax bracket.
• Desired reduction in work hours.
• Existing super balance.
• Planned retirement age.
• Contribution levels.
• Investment performance.

A TRIS can be a useful tool for Australians seeking greater flexibility in the years leading up to retirement. However, because the benefits depend heavily on individual circumstances, obtaining personalised financial advice before implementing a TRIS strategy is essential to ensure it aligns with your retirement and lifestyle goals.

The team at First Financial comprises financial experts who help hundreds of Australians retire well and make informed, intelligent financial decisions. We cover everything from retirement and financial advice, investment and wealth management, superannuation and SMSF, insurance, tax, aged care, legal and lending services.

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