Transition to Retirement (TTR): How It Works and Who It Suits
Transition to retirement lets you access some of your super as an income stream once you reach your preservation age, even while you're still working — without needing to fully retire first.
How TTR works mechanically
Once you reach your preservation age (see Preservation Age by Birth Year to check yours), you can start a TTR income stream using some or all of your super, drawing an annual amount within set minimum and maximum limits, while continuing to work in your existing role. Unlike a standard account-based pension, a TTR pension generally has an annual maximum drawdown limit as well as a minimum, since it isn't yet treated as a full retirement pension.
The two common ways people use it
Reducing work hours without reducing income as much — some people use TTR to cut back to part-time hours, topping up their reduced salary with TTR pension payments, easing into retirement gradually rather than stopping abruptly.
A tax and contribution strategy while still working full-time — others use TTR alongside salary sacrifice, drawing a TTR income while simultaneously redirecting more of their salary into super concessionally, potentially improving their overall tax position. This version of the strategy is more complex and depends heavily on individual circumstances, so it's often where people seek personalised financial advice.
Tax treatment
Once you turn 60, TTR pension payments are generally tax-free. Between preservation age and 60, payments may be partly taxable, with a tax offset generally available on the taxable portion. Earnings on assets supporting a TTR pension (before you meet a full condition of release, such as reaching 65 or formally retiring) are generally still taxed within the fund, unlike a standard retirement-phase pension where earnings are typically tax-free — this distinction is one of the more commonly misunderstood parts of TTR.
Who tends to benefit from TTR
People wanting to reduce working hours gradually rather than stop abruptly, and people on higher incomes who can combine it with salary sacrifice for a genuine tax benefit, tend to get the most out of TTR. It's generally less beneficial for someone on a lower income without meaningful scope to increase salary sacrifice, since the tax advantages are smaller relative to the complexity involved.
What changes once you fully retire
Once you meet a full condition of release (typically permanently retiring after reaching preservation age, or reaching age 65 regardless of work status), your TTR pension can convert into a standard account-based pension, removing the maximum drawdown limit and generally making fund earnings tax-free — see Account-Based Pensions Explained.
Frequently asked questions
Can I keep contributing to super while on a TTR pension?
Yes — many people combine a TTR pension with ongoing salary sacrifice contributions as part of the strategy, subject to the usual contribution caps.
Is TTR the same as retiring?
No — TTR specifically allows access while still working; it doesn't require you to reduce hours or officially retire, though many people use it alongside a gradual reduction in work.
What happens to a TTR pension if I stop working entirely?
It generally converts to a standard, unrestricted account-based pension once you notify your fund that you've met a full condition of release, removing the annual maximum drawdown limit.
Confirm current preservation age settings and TTR pension tax rules on ato.gov.au before publishing.
This article contains general advice only. It has been prepared without taking into account your personal objectives, financial situation or needs, and does not constitute a recommendation to acquire, hold, or dispose of any financial product. Before acting on this information, consider its appropriateness to your own circumstances, and seek independent financial, tax and/or legal advice, or speak with a licensed financial adviser, before making any decision.
