By Philippa Billings, Chief Advice Officer, Otivo
At 60, something shifts in the super system that most people never notice. Super stops being entirely locked away and becomes accessible — not as a lump sum, but as an income stream that can be drawn while you're still on the payroll. That's the transition to retirement pension, and the name does it no favours, because nothing in the rules requires you to be transitioning anywhere. Here's how the account actually works, what the 4% and 10% limits mean, and where the strategy runs out of usefulness.
A transition to retirement pension is an income stream started from super after reaching preservation age — 60 for all Australians — while still working. As at August 2026, payments of between 4% and 10% of the account balance can be taken each financial year, and the ATO treats it as a non-commutable income stream, meaning lump sums generally aren't available.
What is a transition to retirement pension?
A transition to retirement pension, sometimes called a TTR pension or a transition to retirement income stream (TRIS), is a super account that pays regular income instead of sitting in accumulation phase. The ATO's transition to retirement rules allow access to preserved super at preservation age without retiring or leaving a job — something that wasn't possible for people under 65 before the rules were introduced.
The key word in the ATO's description is non-commutable. A TTR pension pays income; it doesn't hand over capital. That single restriction is what separates it from the account-based pension someone starts after fully retiring.
How does a transition to retirement pension work in practice?
Starting a TTR pension creates what could be called the two-account structure, and understanding it explains almost everything else about the strategy.
- The accumulation account stays open. Employer super guarantee contributions of 12% and any salary sacrifice keep flowing into it, because contributions can't be paid into a pension account.
- The pension account is funded by rolling over some or all of the accumulation balance. It pays income on a schedule set by the fund, and it can't receive contributions.
So a 61-year-old earning $115,000 with $430,000 in super might move $300,000 into a TTR pension, leave $130,000 in accumulation, and keep receiving SG contributions into the accumulation side while the pension side pays income. Two accounts, two jobs, one member.
Who can start a transition to retirement pension in 2026–27?
Eligibility rests on one number. Since 1 July 2024, preservation age has been 60 for every Australian, so the birthdate tables that once set it anywhere between 55 and 60 no longer apply to anyone. Reaching 60 and still working, in any capacity, is the whole test.
There's no minimum number of hours, no requirement to reduce them, and no requirement to tell an employer. Someone who has already met a full condition of release — retired after 60, or reached 65 — sits outside the TTR rules entirely, because they can start an ordinary account-based pension with fewer restrictions.
How much can come out of a TTR pension each year?
Payments sit inside a band the industry calls the 4/10 rule, and the two ends of it behave differently.
- The minimum is 4% of the pension account balance, measured at 1 July each year, or at the commencement balance in the first year. In a part-year, the minimum is pro-rated for the days remaining.
- The maximum is 10% of the same balance, and it isn't pro-rated. A pension started in April still has the full 10% available before 30 June.
On a $300,000 pension balance, that's a band of $12,000 to $30,000 for the financial year. Many Australians use only part of it, and the fund recalculates the band each 1 July as the balance moves.
How is a transition to retirement pension taxed?
There are two separate tax layers, and conflating them is the most common misunderstanding of the whole strategy.
Inside the fund, earnings on assets supporting a TTR pension are taxed at up to 15% — the same as accumulation phase. This is the point people get wrong: the tax exemption on earnings only arrives when the pension moves into retirement phase.
In your hands, income payments from the taxed element are tax-free from age 60 and aren't included in assessable income. Because preservation age is now 60, that applies to everyone drawing a TTR pension. The detail sits in our piece on how a transition to retirement pension is taxed.
What a transition to retirement pension can't do
Three limits define the account, and they're worth knowing before the paperwork starts.
It can't pay a lump sum from preserved benefits. The non-commutable rule means no ad hoc withdrawals of capital, although the balance can generally be commuted back to accumulation phase if circumstances change.
It doesn't get the earnings tax exemption. That waits for retirement phase, which is also the point the $2.1 million transfer balance cap starts to apply.
It doesn't guarantee income for life. The pension pays from a finite balance, and drawing from super before retiring leaves less invested. ASFA's Retirement Standard puts the lump sum for a comfortable retirement at 67 at $630,000 for a single homeowner and $730,000 for a couple, which is useful context for anyone weighing up an early drawdown.
Frequently asked questions
Can you start a transition to retirement pension and keep working full time?
Yes. There's no requirement to reduce hours or change employment at all. The transition to retirement rules were designed to allow reduced hours without reduced income, but nothing obliges a member to use them that way.
Do employer contributions stop once a TTR pension starts?
No. Super guarantee contributions continue to be paid into the accumulation account, because pension accounts can't accept contributions. Most members end up holding both accounts at the same time.
Can a transition to retirement pension be stopped?
Generally yes. Subject to the fund's rules, a TTR pension can usually be commuted and the balance returned to accumulation phase, which stops the income payments and the minimum drawdown requirement.
What happens to a TTR pension at 65?
Turning 65 is a condition of release with no cashing restrictions, so the pension becomes a retirement phase income stream. The maximum payment limit falls away, earnings on the supporting assets become tax exempt, and the value counts towards the transfer balance cap.
Where this leaves you
A TTR pension is a mechanism, not a plan. It changes when super becomes accessible and how income is structured in the years either side of 60 — which makes it most useful to people who already know what they want those years to look like. Otivo, a digital financial advice platform licensed under AFSL and Australian Credit Licence No. 485665, has a retirement planning module that models super access age, balance, salary and lifestyle goals together, so the accessibility question can be looked at alongside the timing question rather than separately.
Sources
- ATO, Transition to retirement. ato.gov.au
- ATO, Retirement withdrawal — lump sum or income stream. ato.gov.au
- ASFA, Retirement Standard, March quarter 2026. superannuation.asn.au
Disclaimer
The information in this communication is current as at August 2026 and has been prepared by Otivo Pty Ltd ABN 47 602 457 732, AFSL and Australian Credit Licence No. 485665. This content is general information only and has been prepared without taking into account your objectives, financial situation or needs. It is not personal financial or taxation advice and should not be relied on as such. Before acting on any information, you should consider its appropriateness having regard to your personal circumstances. This material must not be reproduced in whole or in part, or posted on any social media platform, without the prior written consent of Otivo Pty Ltd.