Did you know...
'Transition to retirement' could help you to minimise your income tax after you are 55.
Shona Gormley
QSuper member since 2000
Have you ever thought you’d like to ease into retirement, without having to retire completely?
Transitioning to retirement is a relatively new concept which can open up a whole range of opportunities as you approach retirement. Put simply, transition to retirement is a means by which you can access your super benefit if you have reached your preservation age, and not met a preservation cashing condition. You don’t even have to change your current job or working hours. This offers some interesting possibilities for you in terms of both lifestyle and tax planning.
How can I do this through QSuper?
Previously, you would have had to meet a preservation cashing condition, such as retiring after reaching your preservation age, to access preserved super.
Now, if you’re eligible you can access your super through a QSuper Allocated Pension account income stream. You can do this by transferring all or part of your superannuation (including your preserved money) into a QSuper Allocated Pension account and drawing on it as a pension to supplement your income.
If you decide to open a QSuper Allocated Pension account for this purpose, you cannot withdraw lump sums from your account until you fully retire or certain other conditions are met.
Am I eligible?
You must have reached your preservation age and not met a preservation cashing condition (outlined in the product disclosure statement (PDS) for Allocated Pension accounts) to take advantage of transition to retirement, but you don’t need to meet any working conditions. This means you can continue your current arrangements, work part-time or even work full-time in your job, and use your superannuation to supplement your income needs.
How can you use it?
You can use the transition arrangements in a number of ways. For example, you could either:
- work part-time and use a QSuper Allocated Pension to supplement your income
- work full-time, but use a QSuper Allocated Pension to provide some or all of your income. You could then salary sacrifice more of your pay, providing potential taxation savings. (You might then also take advantage of the super splitting rules, and share your super with your spouse)
- combine full-time work with a QSuper Allocated Pension account and use the additional income for other investments outside of superannuation, in order to reduce non-deductible debt, or provide lifestyle improvements.
How does it work?
Basically, you nominate how much super you would like transferred to a QSuper Allocated Pension account. This account will then begin paying you a pension to supplement your other income.
You can open this account with as little as $30,000 and even use up to the whole balance of your account (if the money is coming from a Defined Benefit account, your multiple will be reduced to cater for this).
The trick is to work out how much you need to transfer. The easiest way to do this is to start at the other end, and work out how much income you need your allocated pension to generate. And then you can work out how much needs to be in the account to generate that level of income.