Important aspects of a transition to retirement pension:
- You must have reached preservation age in order to start a transition to retirement pension (same as any pension).
- Your preservation age varies depending on the year you were born.
Date of birth Preservation age Before 1 July 1960 55 1 July 1960 – 30 June 1961 56 1 July 1961 – 30 June 1962 57 1 July 1962 – 30 June 1963 58 1 July 1963 – 30 June 1964 59 From 1 July 1964 60
- You can start the transition to retirement income stream while still employed.
- The pension to be paid out must fall within a minimum of 4% of your members balance and a maximum of 10% of your members balance.
- Up until 30 June 2017 all income earned by a transition to retirement pension account is tax free. However from 1 July 2017 transition to retirement pensions will incur a 15% tax rate on all earnings, in line with pension funds in accumulation phase.
- In line with an account based pension, the taxable portion of the pension will be assessable income in the members individual tax return, but will be entitled to claim an offset of 15% of the taxable component of the pension.
- Pension is required to be paid out as a stream and physically paid.
Documentation Requirements of a transitions to retirement pension:
- Record of the members balance at the start of the pension and at 1 July for each subsequent year.
- Pension minutes
- Reports of income earned by the TRIS account
- Reports of the payments made from the TRIS account, showing the breakdown of preservation classes
More can be found about running a TRIS on the ATO website here.