Changes to Transition To Retirement Pensions (TTRP’s) in the recent budget have sparked conversations about the effectiveness of this strategy.
Setting up a Transition To Retirement Pension is relatively simple and straight forward and well worth the tax savings gained in some circumstances. You can set this up if you are aged 55 or over.
The process for setting up your TTRP will vary depending on what super fund you have and whether you have a SMSF. The most important thing is that you speak to your Accountant or Financial Planner first to assess if this is the right strategy for you.
There are minimum and maximum amounts you can take as a TTRP and are as follows:
Setting up your TTRP
Self Managed Superannuation Fund (SMSF)
- You need to contact the Accountant or Financial Planner looking after the fund and tell them you want to start a TTRP. They will draw up the documents, get you to sign them and roll your SMSF into pension phase.
Industry Super Fund
- You will need contact your individual super fund and notify them you want to start a TTRP they will then tell you the steps involved. Some super funds allow you to do this online, others require paper forms, either way it is relatively simple.
Setting up Salary Sacrifice
If you have started a Transition To Retirement Pension and wish to take advantage of the tax breaks associated with this, you will generally want to set up a salary sacrifice arrangement with your employer into your super.
Employed by Employer
- If you are on salary and wages, you just need to contact your employer to execute a salary sacrifice agreement and let them know the amount of extra super contributions you wish to make each pay and they will pay this amount into your super fund. The most popular strategy is to make super contributions that are equal to your pension payments. So your super balance is preserved.
- If you are self-employed you can transfer the desired amount of super straight to your super fund, you can do this via cheque or Bpay. You must do this before the 30 June each year.
Setting up a TTRP is relatively simple and most super funds can help you with this. If you are unsure as to weather a TTRP is right for you or if you are eligible, please contact the office and we can talk you through it.