Saward Dawson > Articles > Superannuation pension strategyBlog - Latest News

Superannuation pension strategy

Transition to Retirement Income Streams (TRIS)

A TRIS is available to anyone who has reached their preservation age. Currently a member aged 55 or over can access their superannuation benefits while still working via a TRIS. If you were born before 1 July 1960 your preservation age is 55 and rises to 60 for those born after 1 July 1964.

What is a TRIS?

A TRIS is a non-commutable income stream that provides access to a member’s superannuation money prior to retirement.

A commutation is the process of converting a pension to a lump sum. A non-commutable income stream is one which when it ceases is not able to be paid as a lump sum. It must instead revert back to accumulation phase.

The current pension rules require a minimum pension payment of 4% of the account balance and a maximum of 10% annually.

What are the benefits of having a TRIS?

A TRIS can be used to supplement your income if you wish to reduce your working hours. Alternatively, you may wish to continue working full time and salary sacrifice more heavily into superannuation while supplementing your income with pension payments from a TRIS.

A consequence of commencing a TRIS is that the income and capital gains earned by the fund’s assets that support the pension account are exempt from tax.

Can I choose to stop a TRIS ?

A member can stop a TRIS at any time and revert back to accumulation phase.

Can I continue to make contributions to the same fund?

New contributions into the same fund can still be made. They continue to attract 15% contributions tax and are held in a separate taxable accumulation account for the member. The income and capital gains earned by the fund’s assets that support the accumulation account are not exempt from tax.

Where both a pension account and an accumulation account are present in a fund an annual Actuarial Certificate is required to establish the proportion of the fund’s income that is exempt.

Do all superannuation funds offer a TRIS?

It is not compulsory for a fund to offer a non-commutable income stream. You will need to check with your current fund to determine if they offer a TRIS.

A Self Managed Superannuation Fund (SMSF) can offer a TRIS if permitted to do so by its Trust Deed.

What tax will I pay on the pension withdrawals?

If you have reached your preservation age and are less than 60 years old, the taxable component of your pension withdrawal will be included in your individual tax return and will be taxed at your marginal tax rate. If the income is paid from a taxed source you will be eligible for a tax offset equal to 15% of the taxable component.

Any pension you receive after age 60 from a taxed source will be tax free in your hands.

Examples of the effect a TRIS has on tax payable and net superannuation balances

Annual Full Time Salary $110,000, superannuation fund balance $400,000 and 100% taxable.

Aim: To maintain same disposable income.

Example 1 Member under 60, reduces work hours to four days per week and supplements income with a TRIS.
Example 2 Member is over 60, reduces work hours to four days per week and supplements income with TRIS.
Example 3 Member under 60, Salary Sacrifices and supplements income with a TRIS.
Example 4 Member over 60, Salary Sacrifices and supplements income with TRIS.

 

Example 1 Example 2 Example 3 Example 4
Full salary  TRIS Under 60 TRIS Over 60  TRIS &salary sacrifice Under 60  TRIS &salary sacrifice Over 60
Income comparison
Salary  110,000  88,000  88,000  110,000  110,000
Less Salary Sacrifice  0  0  0  50,257  62,774
Plus Pension 0 17,510 12,870 40,000 40,000
Less Income Tax/Medicare/Rebate 31,650 27,160 22,520 21,393 8,876
Disposable Income 78,350 78,350 78,350 78,350 78,350
Tax Comparison
Income Tax/Medicare/Rebate 31,650 27,160 22,520 21,393 8,876
Plus Contributions Tax 1,485 1,188 1,188 9,024 10,901
Plus Earnings Tax in  Super 2,450 40 40 307 370
Total Tax 35,585 28,388 23,748 30,724 20,147
Tax Saving 7,197 11,837 4,861  15,438
Super Balance Comparison
Contributions 9,900 7,920 7,920 60,157 72,674
Less Contributions Tax 1,485 1,188 1,188 9,024 10,901
Less Pension Withdrawals 0 17,510 12,870 40,000 40,000
Add Earnings – 4% 16,337 15,569 15,485 16,444 16,871
Less Tax on Super Earnings 2,450 40 40 307 370
Annual Movement in Super 22,302 4,751 9,307 27,270 38,274

Marie Ickeringill's Articles

ATO continues to be tough with SMSF Trustees

Transition to Retirement Income Streams (TRIS) A TRIS is available to anyone who has reached their preservation age. Currently a member aged 55 or over can access their superannuation benefits while still working via a TRIS. If you were born before 1 July 1960 your preservation age is 55 and rises to 60 for those […]

Read more

Valuing Investments in your SMSF

Transition to Retirement Income Streams (TRIS) A TRIS is available to anyone who has reached their preservation age. Currently a member aged 55 or over can access their superannuation benefits while still working via a TRIS. If you were born before 1 July 1960 your preservation age is 55 and rises to 60 for those […]

Read more

Reviewing your SMSF Investment Strategy

Transition to Retirement Income Streams (TRIS) A TRIS is available to anyone who has reached their preservation age. Currently a member aged 55 or over can access their superannuation benefits while still working via a TRIS. If you were born before 1 July 1960 your preservation age is 55 and rises to 60 for those […]

Read more

Superannuation Announcements

Transition to Retirement Income Streams (TRIS) A TRIS is available to anyone who has reached their preservation age. Currently a member aged 55 or over can access their superannuation benefits while still working via a TRIS. If you were born before 1 July 1960 your preservation age is 55 and rises to 60 for those […]

Read more

Returning to work after accessing your super

Transition to Retirement Income Streams (TRIS) A TRIS is available to anyone who has reached their preservation age. Currently a member aged 55 or over can access their superannuation benefits while still working via a TRIS. If you were born before 1 July 1960 your preservation age is 55 and rises to 60 for those […]

Read more