Transition to retirement for teachers: how TTR works, with real numbers

How a TTR income stream works

Normally you can't touch your super until you retire. TTR is the exception. Once you reach preservation age (60 for anyone under 62 today), you can move some or all of an accumulation balance into a transition to retirement income stream, also called a TTR pension or TRIS, and take regular payments while you keep working full-time or part-time.

Because earnings inside a TTR are taxed the same as ordinary super, the tax benefit doesn't come from the pension account itself. It comes from what you do with your salary alongside it, which is why the two strategies below are what most teachers consider.

Strategy 1: go part-time and top up from super

Many teachers want to drop a day a week in their last few years. TTR lets you do that while keeping take-home pay close to what it was. You give up some super growth in exchange for time.

Strategy 2: keep working full-time, salary sacrifice and replace the pay

This is the classic 'TTR plus salary sacrifice' approach. You salary sacrifice up to your concessional cap, which cuts your taxable income, and draw a tax-free TTR pension to replace the lost take-home pay. The money going into super is taxed at 15% instead of your marginal rate (32% including Medicare for most teachers), and the difference stays in your super.

About $2,800 a year is a real but modest gain. Over four years from 61 to 65 it adds up to roughly $11,000 before earnings. It isn't worth much if the fees or the effort of running a second account eat into it, or if you'd rather keep the money accessible. For how salary sacrifice works on its own, see salary sacrifice super for teachers.

If you're in a defined benefit scheme

TTR works most simply with an accumulation account. Closed state defined benefit schemes have their own rules, and some make TTR hard or impossible from the defined benefit itself.

• WA Gold State Super: GESB describes a transition to retirement option for Gold State members, where the benefit is moved into its TTR Pension (with tax taken off on transfer). The age and conditions that apply to you depend on your preservation age, so confirm eligibility with GESB before planning around it. See our Gold State Super guide.
• NSW SASS and SSS: benefits are generally paid when you leave employment. Ask State Super whether any part of your account can be used for a TTR while you work.
• QSuper Defined Benefit: the account stays open while you work for a defined benefit employer. Ask QSuper what TTR options apply to your accounts.
• Notional contributions: in DB schemes, the concessional cap is tested against a notional figure, not 12% of salary. Strategy 2 above can push you over the cap if you use the wrong number.
• Untaxed schemes: payments that come from an untaxed source (such as Gold State or Super SA's schemes) can be taxed differently even after 60. Ask the fund how a TTR from your account would be taxed.
• Part-time and final salary: in a final-salary scheme, cutting to part-time in your last years can lower your benefit. Get a written estimate before you change your FTE.

When TTR doesn't help

The salary-sacrifice strategy works best when there's a big gap between your marginal rate and 15%. For most full-time teachers that's 32% (30% plus Medicare). The part-time strategy is about lifestyle more than tax, so the real question is whether you can afford to draw down your balance from 60 and still have enough to reach the Age Pension at 67. See when teachers can retire.

How to set up a TTR, step by step

This page is general information, not personal financial advice. TTR decisions depend on your balance, scheme, tax position and plans, so talk to your fund or a licensed financial adviser before you start.