A Transition to Retirement Income Stream, commonly called TRIS, is a type of pension that allows individuals who have reached their preservation age but are still working to access some of their superannuation. Instead of waiting until full retirement, TRIS enables people to draw a limited income stream while continuing to contribute to super through their employment.
TRIS is often used to reduce working hours while maintaining income, or to boost retirement savings by combining salary sacrifice with pension withdrawals. It provides flexibility for people easing into retirement, rather than stopping work abruptly.
Advanced
From a technical perspective, TRIS accounts operate under specific rules set by superannuation law. Withdrawals are restricted to a minimum of 4% and a maximum of 10% of the account balance each financial year. Investment earnings in a TRIS are taxed at up to 15% until the individual retires or reaches age 65, at which point the TRIS can convert into a tax-free retirement phase pension.
Strategies often include salary sacrifice, where pre-tax income is directed into super while drawing from TRIS to maintain take-home pay. This can create tax advantages, particularly for individuals in higher income brackets. TRIS also provides an option for those wanting to gradually reduce work without sacrificing lifestyle.
Relevance
- Supports gradual transition from full-time work to retirement
- Provides income flexibility for individuals reducing work hours
- Can create tax efficiencies when combined with salary sacrifice strategies
Applications
- Supplementing income while cutting back on working hours
- Using salary sacrifice to grow superannuation while accessing TRIS payments
- Planning for retirement with a smoother financial transition
- Converting TRIS into a full retirement pension once eligible
Metrics
- Annual withdrawal limits (4%–10% of account balance)
- Tax savings achieved through combined strategies
- Growth of superannuation balance despite withdrawals
- Sustainability of income until full retirement
Issues
- Withdrawals reduce the overall superannuation balance
- Misuse of TRIS without proper planning may lower retirement income
- Investment earnings are still taxed until full retirement or age 65
- Complexity of rules may confuse members without professional advice
Example
A 60-year-old reduces working hours from full-time to part-time. To maintain income, they start a TRIS, withdrawing 7% of their balance annually. At the same time, they salary sacrifice part of their earnings into super. This strategy maintains their lifestyle, reduces tax, and continues to grow retirement savings until full retirement.
