This article discusses transition to retirement pensions for people over age 65.
It explains why individuals over age 65 will never have a transition to retirement (TTR) pension.
A transition to retirement pension provides access to superannuation for people who have reached their superannuation preservation age, but will be continuing to work.
A transition to retirement pension can be started using some or all of the money held within a person’s superannuation accumulation account.
But there is no need for an individual over age 65 to start a transition to retirement pension.
If a person over age 65 wants to access their super, an ordinary account based pension or lump sum withdrawal (or combination of the two) is the way to go.
Here’s why.
Transition to Retirement Pension Over 65
A transition to retirement pension is only suited to people who have reached their preservation age and are under age 65.
Based on the transition to retirement rules, the income that can be withdrawn from a transition to retirement (TTR) pension for such individuals must be within minimum and maximum thresholds.
Specifically, a recipient of a TTR Pension is able to receive an income of between 4% and 10% of their balance each financial year, as calculated on 1 July of each year (pro-rata for TTR pension started mid-year).
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Age 65 is a superannuation condition of release. This allows full, unrestricted access to accumulated superannuation savings.
An account based pension works identically to a TTR pension with one major benefit: there is no upper threshold on the income that can be received. Any person over age 65 with a superannuation accumulation account can use their super to start an account based pension.
In fact, if a person has a transition to retirement pension prior to attaining age 65, the TTR pension will automatically convert to an ordinary account based pension once they reach age 65, effectively removing the upper threshold. Because of this, a person over age 65 will never actually have a transition to retirement pension, as age 65 essentially satisfies retirement in the eyes of legislation (i.e. the member is no longer ‘transitioning’).
Further, once a person reaches age 65, the minimum income threshold increases to 5% and continues to increase as they age, as shown in the table below:
| Age | Min. Pension Threshold (% factor) |
|---|---|
| Under 65 | 4% |
| 65-74 | 5% |
| 75-79 | 6% |
| 80-84 | 7% |
| 84-89 | 9% |
| 90-94 | 11% |
| 95 and above | 14% |
Superannuation Rules for Over 65
If a person over age 65 wishes to access their superannuation in part or in full, they have two main options.
An individual can access their superannuation via an account based pension, lump sum withdrawal, or a combination of the two (having regard to the Transfer Balance Cap).
The amount that can be accessed is only limited by the account balance.
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Accessing Super Over 65 and Still Working
There is nothing stopping a person accessing their superannuation and still continuing to work once they reach age 65.
All withdrawals from super – either in the form of a lump sum or income stream will be tax free, provided the account is made up of only ‘tax-free’ or ‘taxable (taxed)’ components. The ‘taxable (untaxed)’ component will incur tax.
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A superannuation provider or administrator will be able to notify a member of components that their superannuation balance consists of.
