The Transition to Retirement (TTR) strategies present some very exciting opportunities for people who have reached age 55 and are still working.

These opportunities will enable you to;

• access your super whilst you are still working (but only as a pension - not as a lump sum)
• structure your income so that you maximise the amount going into your super, whilst paying less in tax.

We will look at each of these opportunities separately.

Accessing your super whilst you are still working

The government has changed the rules which affect your ability to access your super. Previously, the general rule required you to be age 55 and retired from the workforce (with no intention to work again). This has all changed and you can now access your super once you have reached your preservation age (refer table below) - as long as you access your benefits in the form of an income (lump sum withdrawals are not allowed).

The government calls a superannuation pension fund which meets the transition to retirement measures a "non-commutable income stream".

These changes have created a wonderful opportunity for people who like the idea of "slowing down" a bit, and easing into their retirement. Now, you can reduce your work hours and structure your super so that the income you previously received from work is maintained.

Let's look at an example;

• David has a full-time salary of $50,000
• he would like to work part-time between age 55 and 65
• he decides to take a reduced salary of $30,000
• he has $300,000 accumulated in super

David's Case Study Results

* From age 60 onwards, David's pension payments are tax free.
# David's retirement balance in his super pension runs out after age 60.

Assumptions:
The above super fund earns 7.00% per annum
Tax rates are for the 2007/08 financial year
A minimum person equivalent to 5% of super balance at age 65.

Let's now look at the situation where you may have no interest in reducing your work hours but would like to maximise your super.

In this case study, Judy has;

• no plans to change her work arrangements
• $400,000 accumulated in her super
• earns $70,000 in gross (before tax) income per annum
• has reached age 55 and works full time.

In this example, Judy wants to receive the same take home income that she gets from her work.

Judy's Case Study Results

Assumptions:
The above super fund earns 7.00% per annum
Tax rates are for the 2007/08 financial year
A minimum pension equivalent to 5% of super balance at age 65

My employer/industry super fund does not offer "non commutable income streams".

It is not compulsory for super funds to offer their members non-commutable income streams.

If your fund doesn't offer an income stream that let's you take up the transition to retirement measure, you may be able to choose a new superannuation fund.

Many employees are now able to choose which super fund their employer contributions are paid into.

For more help on how the Transition to Retirement measures can benefit you, please call 50Plus to arrange a free no obligation meeting.