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'Transition to
retirement' changes

From 1 July 2017, some of the rules that relate to transition to retirement products changed.

We'd like to help you make the most of your retirement savings by helping you understand what's changing.

'Transition to retirement' product taxes changed from 1 July 2017

A 'transition to retirement' product may help you achieve your retirement goals. When you reach ‘preservation age’ but are not ready to retire, you may be eligible to start a ‘transition to retirement’ product. It can provide you with annual income payments up to 10% of your account balance per year. It could help supplement your income if you choose to reduce your working hours, without having to compromise your lifestyle.

From 1 July 2017, investment earnings in a transition to retirement account will be taxed at up to 15%. A transition to retirement account will not qualify as a tax-exempt retirement phase account (and count towards your transfer balance cap) until you reach age 65, permanently retire, or meet another condition which allows you to access your super.

Due to the tax changes to ‘transition to retirement’ products, the plans you have in place to achieve your retirement goals may no longer be suitable. You should review your transition to retirement strategy to make sure that it is still the right strategy for you.

For more information on the changes, contact your financial adviser, or call us on 132 652 between 8am and 6pm (AEST/AEDT), Monday to Friday.

  • Here we answer the most frequently asked questions about super contributions, transition to retirement changes and limits on retirement products.

    What are before-tax (concessional) contributions?
    Before-tax (concessional) contributions include contributions that your employer makes into your super account on your behalf, salary sacrifice contributions (that is contributions you direct your employer to make on your behalf from your pre-tax salary) and personal contributions for which you claim a tax deduction.

    What are after-tax (non-concessional) contributions?
    After-tax (non-concessional) contributions include contributions that you make into your super account from your take home pay, available cash savings, or with other available capital.

    What is a transition to retirement pension?
    A transition to retirement (TTR) pension is a product offer that you commence with super savings when you reach your 'preservation age' but haven’t yet fully retired. These pensions can assist you in providing additional cash flow to supplement your employment income if you choose to reduce your working hours but don’t want to compromise your current lifestyle.

    If you have a transition to retirement pension, the minimum drawdown rate is 4% and you’ll be limited to income payments of no more than 10% of your account balance per year.  You won’t be eligible to withdraw lump sums until you have met a full condition of release.

    Your preservation age is 55 if you were born before1 July 1960, and increases depending on the year that you were born. See the Australian Tax Office website for more information

    How does a retirement product work?
    A retirement product provides an income stream to support your lifestyle in retirement. You have to receive a minimum amount from your retirement product each year. The amount you need to receive is based on your age, and your retirement product balance. The minimum drawdown rates range from 4% if you’re under age 65 up to 14% if you are over 95. Once you have retired or met certain other criteria, you are also able to withdraw lump sums if you require additional capital.  

    Your income payments can generally be made fortnightly, monthly, quarterly or yearly depending on your needs. How long your retirement product lasts will depend on how much you withdraw each year, the investment returns you receive and the amount of fees you pay.

This communication is issued by NULIS Nominees (Australia) Limited (ABN 80 008 515 633 AFSL 236465) (NULIS). It is for general information and has not taken into account any particular person’s objectives, financial situation or needs. Before deciding to make a contribution to your superannuation, interested persons should consider the appropriateness of this information having regard to their personal objectives, financial situation or needs. The information contained in this communication is current as at 1 July 2017. Any changes in the law or policy subsequent to this date have not been incorporated in this material.

NULIS is the Trustee of the MLC Super Fund (ABN 70 732 426 024) and the MLC Superannuation Fund (ABN 40 022 701 955). NULIS is part of the National Australia Bank (NAB) group of companies. An investment with NULIS is not a deposit or liability of, and is not guaranteed by NAB. Neither NULIS nor any other company in the NAB group of companies accepts any liability whatsoever for any decision that is made on the basis of or in reliance of the information contained in this material. NULIS is not a Registered Tax Agent and any tax information is of a general nature and should not be relied upon to determine your personal tax situation. It is recommended that you consult a professional tax adviser who is a Registered Tax Agent about your personal circumstances.