Ease yourself into retirement from age 55

If you’re aged between 55 and 65 a ‘Transition to Retirement’ allocated pension allows you to access your super while you’re still working, full time or part time.

Two transition to retirement strategies to consider

1. Less work, same income – reduce your working hours and bolster your reduced salary with income generated from a ‘Transition to Retirement’ allocated pension.

2. More super, less tax – make salary sacrifice contributions to your super and bolster your reduced salary with income generated from a ‘Transition to Retirement’ allocated pension.

It’s something of a balancing act, not only will you need your employer’s approval, you also need to be mindful of legislative changes, which is why we recommend you speak to a retirement specialist.  But the potential exists to use these tax-effective strategies to optimise your super in the years leading into retirement.

The tax effect of transition to retirement strategies

In most instances, you pay less tax on income generated from an allocated pension than you do on the same amount of salary, making transition to retirement strategies a tax-effective way to boost your super balance or cut back your hours.

• Low tax rate – your salary sacrifice super contributions are taxed at 15 per cent instead of your individual income tax rate as long as all your concessional contributions fall within the current cap.
• Tax concessions – aged 55 to 59, the taxable component of your transition to retirement allocated pension income is eligible for a 15 per cent tax offset.
• Tax free income – if you’re aged 60 or over, your transition to retirement allocated pension income is tax free.
• Tax-free investment earnings - the assets backing a transition to retirement allocated pension generate tax-free investment earnings, which would otherwise have been taxed at up to 15 per cent.

Getting started

Most members of the Corporate or Personal Superannuation Division of the Mercer Super Trust aged between 55 and 65 can commence a Transition to Retirement Allocated Pension through the Allocated Pension Division of the Mercer Super Trust.

What you need to consider

Before you make any decisions regarding a Transition to Retirement Allocated Pension in the Mercer Super Trust you should read the Product disclosure statement for the Allocated Pension Division and seek advice from a licensed or appropriately authorised financial adviser.

We’re here to help

Because you don’t deal with transition to retirement strategies every day, it’s good to deal with someone that does.

To discuss your transition to retirement needs with a Mercer financial adviser, who is a retirement specialist, simply follow the link to our financial advice request form, select ‘Retirement options and strategies’ and we will contact you at your preferred time of day – fee free limited financial advice over the phone is just one of the many benefits you’ll enjoy as a member of the Mercer Super Trust.