Case study transition to retirement boosting super

Andy keeps working full-time and boosts his super

Man considering his retirement options

Andy is 58 and earns $100,000 a year. He intends to keep working full-time for at least another few years. Andy has $220,000 in super.

Andy's financial adviser explores whether a transition to retirement (TTR) strategy will work for him.

 How will the retirement income strategy work for Andy?

  1. Andy will transfer most of his super to an account-based pension. His fund requires him to leave a minimum of $5,000 in his accumulation account to keep it open and maintain his insurance.
  2. He will salary sacrifice into super up to his concessional contribution limit. This will reduce his income tax, but also his take-home pay.
  3. He can withdraw up to 10% of his pension balance each year, to top up his overall income back to its current level.

Andy's TTR retirement strategy calculations

Here are his adviser's calculations for the first year of the TTR strategy.


TTR strategy age 58 ($)

TTR strategy age 60 ($)

Gross income 100,000 100,000 100,000  
Minus salary sacrifice1 0 -15,500 -15,500  
TTR pension income2 0 12,379 9,552  
Taxable income 100,000 96,879 84,500  
Minus tax & Medicare Levy3              -26,117 -22,996 -20,169  
Take home pay 73,883 73,883 73,883 (Take home pay stays the same)


  Current ($) TTR strategy age 58 ($) TTR strategy age 60 ($)
Super contributions: employer contributions 9,500 9,500 9,500  
Super contributions: salary sacrifice 0 15,500 15,500  
Investment returns4 15,400 15,400 15,400  
Minus contributions tax5 -1,425 -3,750 -3,750  
Minus TTR pension drawdown 0 -12,441 -9,567  
Minus tax on earnings6 -1,386  -1,386 -1,386  
Net gain in super 22,089 22,823 25,696 More money goes into super           


  Current ($) TTR strategy age 58 ($) TTR strategy age 60 ($0)
Total tax paid7 28,928 28,132 25,305  
Combined tax savings        796 3,623 Because he pays less tax

Tax on transition to retirement pensions

Since 1 July 2017, investment returns on super transition to retirement pensions are taxed at up to 15%, just as they are in the accumulation phase. See the Australian Tax Office (ATO) website for more information on the changes and how they will affect you.

Benefits of the TTR strategy 

Andy's take-home pay will stay the same. He will save nearly $800 in tax overall in the first year. As he will increase his super by the same amount, Andy will also have more money in super when he finally stops work.

His adviser has told him that when he turns 60 and his TTR pension income becomes tax free his savings will be over $3,600 a year. That also means an extra $3,600 going into his super.

Andy decides that even though the tax savings of $734 a year are not that big initially he will implement the strategy anyway so that he can take full advantage as soon as he turns 60 and keeps working.

How Andy's TTR figures were calculated

Andy's strategy, outlined in the table above used these assumptions:

  • Andy leaves $5,000 in super to keep his account open to receive contributions.
  • Andy's employer continues to make super contributions based on gross income, which are 9.5% of his salary. (Your employer does not have to pay super on amounts you salary sacrifice; however, most employers will continue to pay super on your gross earnings.)
  1. The maximum concessional super contribution is $25,000 for 2018-19.
  2. The amount of TTR pension that can be withdrawn each year by Andy must be between the legislated minimum 4% and maximum 10% of the account balance. Andy is drawing the amount of pension necessary to replace the income he has lost through salary sacrifice, so that his take home pay stays the same.
  3. Under the TTR strategy, Andy's tax is reduced by a pension rebate equivalent to 15% of his pension income.
  4. Investment returns are based on earnings of 7% and have only been calculated on Andy's current super and pension account balances. They do take into account returns on the current year's super contributions. In practice, investment returns would start to accumulate on contributions when they are received by the fund.
  5. Concessional super contributions (employer and salary sacrifice contributions) are taxed at a rate of 15% when they are received by the super fund.
  6. Investment returns are taxed at a maximum of 15%, however the overall tax rate is often lower due to offsets like dividend imputation credits that reduce tax payable. For this case study we have adopted an average tax rate of 9% on super fund earnings.
  7. This is the total of income tax, Medicare levy, super contributions tax and tax on investment earnings.

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Last updated: 04 Feb 2019