Transition to retirement explained: how a TTR income stream works, what it costs, and who it suits in 2026-27

Transition to retirement (TTR) is a way to start drawing on your super before you stop work. A TTR income stream (often called a TRIS) lets you reduce your hours and top up your pay from super, or use it as part of a tax strategy while you keep working. It is widely used and widely misunderstood, particularly since the rules changed in 2017. This guide explains how it works, the limits, the tax, what changes at 65, and where it can go wrong. The ATO pages were read on 13 October 2026, and the strategy analysis is from the FirstTech TTR strategies guide for 2025-26. This is general information, not advice.

What a TTR income stream is

The ATO describes it this way: the TRIS "tops up your part-time income with a regular 'income stream' from your super savings", whereas previously you could only access your super once you were 65 or retired. It lets members who have reached their preservation age of 60 access super benefits without having to retire or leave their job (ATO, TRIS page, last updated 2 April 2025). Preservation age is now 60 for everyone; FirstTech notes it has finished its gradual increase from 55, so TTR is relevant only from age 60.

A TTR income stream is an account-based pension with extra restrictions. Employers must still pay compulsory super guarantee contributions for employees on a TRIS (ATO).

The rules: minimum, maximum, and no lump sums

• Minimum payment. A TRIS has to pay a minimum amount each year, as other account-based pensions do. The ATO's key rates page shows the minimum percentage factor for under-65s as 4% from 2023-24 onwards (it was temporarily halved from 2019-20 to 2022-23). The minimum is worked out on the account balance, as at 1 July each year or the start date in the first year.
• Maximum payment. Until the member meets a condition of release with no cashing restrictions, total payments in a year must not exceed 10% of the account balance at the start date (the year it starts) or at 1 July each year. If the trustee does not meet these requirements in a year, the ATO says the fund is treated as not having paid an income stream at any time in that year, and the TRIS ends for income tax purposes.
• Non-commutable. The ATO says you can only access benefits as a "non-commutable" income stream, one that cannot be converted to a lump sum. FirstTech notes limited exceptions, such as paying a super surcharge, a family law payment split, a release authority, or cashing an unrestricted non-preserved benefit.

Example of the range: a $400,000 balance at 1 July gives a minimum of $16,000 and a maximum of $40,000 for that year.

How it is taxed

FirstTech treats TTR income stream payments from age 60 as tax-free, which is why a TTR can replace lost wages efficiently; confirm this for your fund's components. Inside the fund, the ATO says that if a TRIS is not in the retirement phase, the earnings from the supporting assets are not eligible for exempt current pension income and are taxed at the relevant rate, which is 15% for the fund. FirstTech notes this applies from 1 July 2017; before that, earnings supporting a TTR stream were tax-free, which is why older descriptions of TTR sound better than today's reality.

A TRIS moves into the retirement phase, and the earnings tax stops, when the member turns 65, or notifies the fund that they satisfy another eligible condition of release (retirement, permanent incapacity, terminal medical condition), or when the stream reverts to a reversionary beneficiary on the member's death (FirstTech; ATO). At that point:

• earnings on the supporting balance become tax-free
• the balance counts towards the member's transfer balance cap (it does not count while the TRIS is not in retirement phase)
• the 10% maximum and the lump sum restriction no longer apply.

See our articles on the transfer balance cap and on minimum pension drawdown rules.

The common strategies

1. Working less. The simplest use: you drop from five days to three and replace the lost pay with TRIS payments. FirstTech lists "reducing working hours prior to retirement and replacing the lost income with tax-effective / tax free income stream payments" as a main use. The cost is a faster draw-down of your super, which has to last.

2. TTR plus concessional contributions. FirstTech describes this as the most common TTR strategy: you salary-sacrifice (or make personal deductible contributions) into super and use TRIS payments to replace the take-home pay. The contributions are taxed at 15% in the fund rather than at your marginal rate. For FY2026-27, the general concessional contributions cap is $32,500 (ATO, up from $30,000), and it includes your employer's SG contributions, which are 12% of ordinary time earnings, so the room left for extra contributions is the cap less what your employer already pays. Unused cap amounts from the past five years can be carried forward if your total super balance was under $500,000 at the previous 30 June (ATO). See our article on carry-forward concessional contributions.

The FirstTech analysis identifies factors that cut the benefit: lower personal income tax rates since 1 July 2024, higher "effective tax-free thresholds", and the 15% tax on TRIS earnings. It also notes that making contributions that take taxable income below the effective tax-free threshold is generally not beneficial. Whether the strategy is worthwhile depends on your marginal tax rate, your balance, fees, and how long you keep working.

3. Non-concessional strategies. FirstTech notes TTR-style strategies using non-concessional contributions, which may be available even when aged 67 to 74 and not working, because the bring-forward rule is available under 75 at the start of the year. Personal deductible contributions for those aged 67 to 74 still need the work test or an exemption.

4. Reducing debt or optimising between spouses. FirstTech lists reducing a mortgage or other debt and optimising super balances between members of a couple as other reasons for a TTR strategy.

Things to watch

• Mixing contributions with the TRIS. The ATO says a contribution received after a pension starts can't be added to the capital supporting the pension. To combine accumulation money with an existing TRIS, the member has to fully commute the original TRIS and apply for a new pension with the increased balance.
• Preserved money and fees. You still need to meet preservation rules, and a TRIS may carry set-up and ongoing costs. Check your fund's fees.
• The Age Pension. A TRIS balance is counted in the Age Pension assets test, and the income is deemed. See our articles on TTR and the Age Pension assets test and working past Age Pension age. A strategy that builds a bigger super balance can reduce Age Pension later, because super is assessed once you reach Age Pension age.
• High incomes. Division 293 tax can apply to concessional contributions for high earners; see Division 293.
• Not compulsory. A fund is not required to offer a TRIS (ATO, SMSF page), so check your fund's product and trust deed.

For a shorter introduction see our article on TRIS basics and on accessing super at preservation age.

Worked example

Illustrative only, not personal advice, and not a projection.

Helen, 62, earns $100,000 and has $400,000 in super. She wants to move to four days a week. Her fund offers a TRIS. Under the rules above, her TRIS payments for the year must be at least 4% ($16,000) and at most 10% ($40,000) of her 1 July balance, and she cannot take a lump sum. Her payments are tax-free at 60 or over from a taxed fund. She chooses $20,000 a year to fill part of the pay cut, and keeps working and receiving SG contributions. Inside the fund, the earnings on the TRIS balance are taxed at 15% until she turns 65 or retires, at which point they become tax-free and the balance is counted against her transfer balance cap. If she also wanted to salary-sacrifice, her cap room is $32,500 less her employer's SG contributions for the year, and she would need advice on whether the net benefit exceeds the fees and the faster draw-down on her balance.

Sources

• ATO — Transition to retirement
• ATO — Transition to retirement income streams (TRIS)
• ATO — Payments from super (key super rates and thresholds)
• ATO — Contributions caps
• FirstTech — TTR strategies guide 2025-26