TTR vs Account Based Pension: What Changes When You Retire?

A transition to retirement pension and an account based pension are both super income streams.

The difference is timing and restrictions.

A TTR is available once you reach preservation age, even if you are still working.
An account based pension usually applies once you have fully retired or turned 65 and met a condition of release with no cashing restrictions.

If you need a refresher on account based pensions, start here:
Account Based Pensions Explained

If you want the full breakdown of TTR strategies, see:
Transition To Retirement Pensions Explained

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What is preservation age?

Preservation age is the earliest age you can access your super.

It depends on your date of birth and ranges from 55 to 60.

Reaching preservation age allows you to start a TTR.
It does not automatically allow unrestricted access to your super.

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What is a TTR?

A transition to retirement income stream allows you to:

• Access super after preservation age
• Continue working
• Supplement income or salary sacrifice

If you are under 65 and have not met a full condition of release:

• You must withdraw at least the minimum percentage
• You cannot withdraw more than 10 percent of the balance each financial year

This maximum limit is a key difference.

The TTR is considered non commutable until you meet a condition of release with nil cashing restrictions. That means you cannot freely convert it into lump sums until retirement conditions are satisfied.

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What is a standard account based pension?

A standard account based pension applies once you meet a condition of release with nil cashing restrictions.

This usually means:

• Retiring after preservation age
• Turning 65
• Permanent incapacity
• Terminal medical condition

Once in retirement phase:

• There is no maximum withdrawal limit
• Investment earnings are generally tax free
• The pension counts toward your transfer balance cap

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Side by side comparison

The structural differences are significant.

The structural differences are significant.

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Tax treatment differences

TTR

If the TTR has not yet moved into retirement phase:

• Investment earnings are taxed at up to 15 percent inside the fund.

Once it moves into retirement phase:

• Earnings become generally tax free.

Account based pension

• Investment earnings are generally tax free in retirement phase.
• Payments from taxed funds are generally tax free from age 60.

This tax difference can materially affect long term outcomes.

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Simple example

Liam is 60 and still working.

He starts a TTR with $500,000.

He must withdraw at least the minimum and cannot withdraw more than 10 percent.

Investment earnings remain taxed at up to 15 percent while he continues working and has not met a full retirement condition.

Two years later, he retires.

His TTR moves into retirement phase:

• The 10 percent maximum disappears.
• Earnings become generally tax free.
• It now operates like a standard account based pension.

Same structure. Different phase.

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When does a TTR become a standard pension?

A TTR automatically moves into retirement phase when:

• You turn 65

It can also move into retirement phase if you:

• Retire after reaching preservation age
• Meet another condition of release with nil cashing restrictions

Once that happens:

• The 10 percent withdrawal cap no longer applies
• Earnings become generally tax free
• It functions as a standard account based pension

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Strategy differences

A TTR is typically used for:

• Reducing work hours
• Boosting super through salary sacrifice
• Managing tax while still employed

A standard account based pension is typically used for:

• Funding retirement income
• Managing drawdown in retirement
• Long term retirement phase planning

They serve different stages of life.

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FAQs

What is the main difference between a TTR and an account based pension?

A TTR allows access to super after preservation age while still working, but has withdrawal limits and may not be in retirement phase. A standard account based pension applies once a full condition of release is met and has no maximum withdrawal limit.

Are earnings taxed differently in a TTR?

Yes. Investment earnings in a TTR are taxed at up to 15 percent unless the pension moves into retirement phase. Earnings in a retirement phase account based pension are generally tax free.

Does a TTR count toward the transfer balance cap?

A TTR only counts toward the transfer balance cap once it moves into retirement phase.

Can a TTR become an account based pension?

Yes. Once a member meets a condition of release with nil cashing restrictions, a TTR can move into retirement phase and operate as a standard account based pension.

What is preservation age?

Preservation age is the minimum age at which you can access your super. It ranges from 55 to 60 depending on your date of birth.