Accessing Your Super Benefits Before Retirement

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Accessing Your Super Benefits Before Retirement


Nowadays more and more people are choosing to remain in the workforce despite reaching their respective retirement (preservation) age. However, depending on their circumstances, they may not necessarily wish to continue with full time employment.


If you are under 65 and contemplating reducing your hours at work, you may have concerns about maintaining the same standard of living on a reduced income.  If this is the case, one of the available options to supplement this loss of income is to commence a transition-to-retirement pension.



Similar to a normal account-based pension, a transition-to-retirement pension allows you to access your superannuation benefits without having to retire from the workforce.


However, unlike an account-based pension, there are additional restrictions that apply to a transition-to-retirement pension such as:

  • In any given financial year, you are only permitted to withdraw up to 10% of your pension balance at the beginning of the year.
  • Benefits cannot be paid as a lump sum, until you retire or satisfy other condition of release such as reaching the age of 65.



There are numerous benefits to commencing a transition-to-retirement pension, including:

  • You can minimise your overall tax liability under this option (depending on your marginal tax rate) when combined with an appropriate salary packaging strategy.
  • Earnings allocated to the transition-to-retirement pension account are tax-free in the superfund, thus boosting your superannuation balance.


Despite the above benefits, it is important to consider whether this option is the most appropriate strategy for your personal circumstances.  If you are under 60, generally the pension benefits paid to you will be taxable at your marginal tax rate, which would essentially negate tax savings.


You should also consider whether you might be unnecessarily accelerating the depletion of your superannuation fund benefits.  Given the strict minimum pension withdrawal requirement that applies and various restrictions in contributing surplus funds back into your superfund (where earnings are taxed concessionally) determining the time of commencement may not be straight forward.


Whether this is the right choice for you will depend on a number of things specific to your personal situation.  If you are considering commencing a transition-to-retirement pension, or have questions about your retirement plan in general, please contact your ESV Engagement Partner on 9283 1666.


Article by Donnashia Khoe