Superannuation: What is TRIS (transition to retirement income stream)?

A Transition to Retirement Income Stream (TRIS) enables individuals of a certain age to access a portion of their superannuation while continuing to work, without the need to retire.

It provides Australians with flexibility as they transition from full-time employment to retirement, utilizing their superannuation savings to supplement their income.

How does TRIS work?

A TRIS functions like an account-based pension (ABP), using preserved superannuation savings to provide a tax-effective income stream.

Initially, payments must be at least 4% of the account balance upon commencement and annually from July 1 onwards. Due to market volatility, the federal government temporarily halved the minimum drawdown rate for the 2022–23 financial year.

There are distinct differences between a TRIS and a standard ABP:

• Withdrawals from a TRIS are capped at a maximum of 10% of the account balance until a retirement condition of release is met.
• Earnings within a TRIS are taxed at a maximum of 15%, whereas earnings in a retirement phase ABP are tax-free.
• Unlike an ABP, a TRIS does not count towards the $1.9 million transfer balance cap from July 1, 2023.

Upon meeting a full condition of release, a TRIS can be converted into an account-based pension.

What are the tax advantages of a TRIS?

When funds are transferred from superannuation to a TRIS, lump sum tax is deferred.

Income payments’ taxable component is subject to marginal tax rates with a 15% offset. At age 60, income payments and withdrawals from a TRIS are typically tax-free, and TRIS income does not need to be declared in tax returns.

How can pre-retirees use a TRIS?

There are several benefits for pre-retirees in starting a TRIS:

• For those continuing full-time work, a TRIS can bolster super balances.
• Pre-retirees transitioning to part-time work can use a TRIS to maintain net income levels.
• Using a TRIS to reduce or eliminate debts before retirement is also feasible by directing income towards repayments, thus saving on interest.

Considerations before starting a TRIS

To initiate a TRIS:

• You must have reached preservation age as per the below table.

Date of birth	Preservation age
Before 1 July 1960	55 years
Between 1 July 1960 and 30 June 1961	56 years
Between 1 July 1961 and 30 June 1962	57 years
Between 1 July 1962 and 30 June 1963	58 years
Between 1 July 1963 and 30 June 1964	59 years
After 30 June 1964	60 years

• Minimum annual pension amounts must be met, and annual drawdowns are restricted to 10% of the balance.
• Lump sum withdrawals are limited to the unrestricted, non-preserved component until preservation age is attained.
• Proper record-keeping of TRIS value, benefit payments, and method of payments is required.

Consultation with superannuation experts

Considering a TRIS before retirement may impact the longevity of super savings. For personalised guidance, contact the specialists at Zeal Wealth or contact us direct on 0457 583 331 or via our Contact Us page HERE.