Transition to retirement (TTR)

Transition to retirement (TTR)

A transition to retirement strategy is available to super members that have reached their preservation age and are looking to access a limited amount of their super, without having to fully retire from full time employment.

This strategy was made available back in 2005 as way to offer flexibility for individuals who might be wanting to reduce their employment hours whilst supplementing the reduced income through access to super.

How does TTR work?

A TTR is similar to the standard account-based pension (ABP), but with some differences.

The main ones being:

• Withdrawals must be equal to at least 4% of the account balance (on July 1 each year) with a maximum withdrawal amount of 10% of the account balance, until a condition of release is met.
• Earnings are taxed at a maximum of 15% within TTR, while earnings in an ABP in retirement phase are tax free.
• From age 60, all withdrawals – that is, payments to the member - are generally tax-free.
• Unliked ABP, a TTR does not count towards your transfer balance cap.
• Once you reach a full condition of release, you are able to convert your TTR into a ABP.

What to know before starting a TTR

Everyone’s situation and circumstances are different, so seek professional advice as to whether this would be suitable to your circumstances.

Things to keep in mind before starting a transition to retirement are:

• You will need to have reached preservation age to start a TTR.
• Your age and the tax components of your super will identify the tax applicable. TTR is not considered retirement phase income, so earnings in a TTR are not tax free.
• Once you commence a TTR, you can’t add further capital to that pension.
• Not all funds offer TTR to their members, you will need to see if your fund offers this.
• Accessing your Super prior to retirement may affect the longevity of your balance.

There are other reasons individuals may start a TTR (such as recontribution strategies or managing transfer balance caps). Reach out to us today for advice on whether a TTR may be suitable for you.

Private Health Insurance Premiums

The federal government has recently approved an average increase in private health insurance premiums of 3.03%, expected to take effect as of 1st April 2024. This figure applies on an industry average basis and does not mean insurers must increase all their premiums by this amount. Specific increases will vary by insurer.

In practice the health minister agrees on increases on an insurer-by-insurer basis. Each individual insurer will have told the health minister how much they want to increase their premiums, with the minister needing to approve each insurer.

The top two biggest approved increase were from CBHS Corporate Health and NIB. The other large insurers, Bupa and Medibank, have also been allowed to increase above the average premium increase, with HCF (Hospitals Contribution Fund of Australia Ltd) increasing below the average.

With that said, now is a good time to shop around, or call your current provider and see what their best offer is.

*Source: https://www.health.gov.au/resources/publications/average-annual-price-changes-in-private-health-insurance-premiums?language=und

Please contact us on 03 9268 1118 or [email protected] to discuss our services further.

Alex, Anu and the team.

This report has been prepared by Alex Henderson & Anu Souvannavong

Shaw and Partners, Morrissey Wealth Management

Level 36, 120 Collins Street

Melbourne VIC 3000

Morrissey Wealth Management (Authorised Representative Number 268130) is a Corporate Authorised Representative of Shaw and Partners Limited (AFSL 236048) (ABN 24 003 221 583)

?

This market update is issued by Morrissey Wealth Management an authorised representative (no. 268130) (the “Morrissey Group”) of Shaw and Partners Limited AFSL 236048. This market update is confidential and may be privileged. Unauthorised use, copying or distribution of any part of this document including attachments is prohibited.? The views expressed are personal to the Morrissey Group and do not necessarily reflect the views of Shaw and Partners. This market update has been prepared without taking into consideration any investor's financial situations, objectives or needs. Accordingly, before acting on the advice in this document, if any, you should consider its appropriateness to your financial situation, objectives and needs. Every reasonable effort has been made to ensure the information provided in this document is correct, but we cannot make any representation nor warranty as to the accuracy, completeness or currency of that information. To the extent permissible by law, no responsibility for any errors or misstatements is taken, negligent or otherwise.? Shaw or its authorised representatives may also receive fees or brokerage from dealing in financial products, see Shaw’s Financial Services Guide for information about the services offered by Shaw available at https://www.shawandpartners.com.au/.