What Happens to a TTR Pension at Age 65?

When you turn 65, a transition to retirement pension moves automatically into retirement phase. You do not have to retire, reduce hours or lodge a request for that birthday rule to apply.

Three things then change. The 10 percent maximum no longer applies. The pension creates or adds to your transfer balance account. And earnings on the assets supporting the pension may become exempt current pension income if the fund claims that exemption.

The general transfer balance cap is $2.1 million from 1 July 2026. Your personal transfer balance cap can be lower, or otherwise different, if you have already had money in retirement phase.

The starting point for how a TTR works before 65 is the transition to retirement pension guide. The ATO overview is here: ATO transition to retirement guidance

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The automatic change at 65

Turning 65 is a condition of release with nil cashing restrictions. Superannuation law treats the TTR as moving into retirement phase on that date.

You can keep working. The pension does not wait for you to resign.

Other conditions of release, such as retirement after preservation age, are different. Those generally depend on the fund or provider being notified. Do not assume that meeting the condition in your own circumstances automatically changes the pension's tax treatment if the fund has not been told.

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What changes at 65

1. The 10 percent maximum falls away

Before retirement phase you cannot take more than 10 percent of the relevant TTR balance each financial year. Once the pension is in retirement phase, that cap is gone. You can take more than 10 percent if you choose.

The minimum remains. From 65 to 74 the usual minimum for an account based pension is 5 percent, using the age-at-1-July rule described below.

Just because you can take more does not mean you should. The money that leaves the pension is no longer invested in a retirement-phase account.

The payment rules before 65 are in TTR minimum and maximum drawdowns.

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2. The pension counts toward the transfer balance cap

A TTR does not use transfer balance cap space while it is outside retirement phase.

On the day it becomes a retirement-phase pension, the value at that time is a transfer balance credit. From 1 July 2026 the general cap is $2.1 million.

A person's personal cap can be different. If you commenced a retirement-phase pension in an earlier year, indexation of the general cap may not fully apply to you. The personal cap can therefore be lower than $2.1 million. People with more than one pension, or a large balance moving across at 65, need this number checked rather than assumed.

The credit does not take money out of the account. It records how much retirement-phase cap has been used.

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3. Earnings may become tax-free inside the fund

While the TTR is outside retirement phase, taxable fund earnings can be taxed at up to 15 percent, with a lower effective rate possible on eligible discounted capital gains. That is explained in tax on a transition to retirement pension.

Once the pension is in retirement phase, earnings on the supporting assets may become exempt current pension income if the fund claims that exemption. The change is not a personal tax refund. It is a fund-level exemption.

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How the minimum payment is timed when you turn 65

This is the rule that is easy to get backwards.

For an existing pension, the minimum percentage for a financial year is set by your age at 1 July, using the 1 July account balance.

If you are 64 on 1 July 2026 and you turn 65 in, say, March 2027:

• FY2026–27 still uses the 4 percent minimum that applies under 65.
• The rate does not jump to 5 percent on your 65th birthday during that year.
• From 1 July 2027, when you are 65 at the start of the year, the minimum is 5 percent of the 1 July 2027 balance.

The retirement-phase change on your birthday still happens. The 10 percent maximum can fall away during the year. The minimum percentage for that year does not get recalculated on the birthday.

In the commencement year, age is measured at commencement rather than at 1 July. That is a first-year rule, not the rule for a pension you have already been receiving.

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What does not change at 65

• You do not have to start a brand new pension unless you want to restructure it.
• The tax-free and taxable component proportions stay as they were when the pension commenced.
• The pension does not reset its investment options or beneficiary nominations by itself. Those should still be checked.

From this point the pension operates under the same payment framework as a standard account based pension, including the minimum drawdown rates that apply based on age at 1 July.

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A practical example

You are 64 on 1 July 2026 with a TTR balance of $600,000.

• FY2026–27 minimum at 4 percent: $24,000
• FY2026–27 TTR maximum at 10 percent: $60,000, until you turn 65

You turn 65 on 15 March 2027. On that date the pension moves into retirement phase. The 10 percent cap no longer applies for the rest of the year. The value at 15 March 2027 is a transfer balance credit against the $2.1 million general cap (or against your personal cap if it is different). Earnings may become exempt current pension income from that point if the fund claims the exemption.

You still only needed to take the 4 percent minimum for FY2026–27. The 5 percent minimum waits until 1 July 2027.

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What to review as 65 approaches

The TTR calculator is built for people who are still in TTR (ages 60 to 64). Once the pension is in retirement phase, the more useful pages are the account based pension guide and retirement planning. Those cover income, the transfer balance cap and how much to draw once the 10 percent cap is gone.

The questions I would still ask are ordinary ones. Do you need more than the minimum? Does the balance fit under your personal transfer balance cap? Should some money stay in accumulation? Have beneficiary nominations been confirmed?

Turning 65 changes the legal wrapper around the pension. It does not, by itself, tell you to spend more of it.

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FAQs

Does a TTR automatically move to retirement phase at 65?

Yes. Turning 65 is a condition of release that moves a TTR into retirement phase automatically. You do not have to stop work for that to occur.

Is the 10 percent withdrawal cap removed at 65?

Yes. Once the TTR is in retirement phase, the 10 percent maximum no longer applies. The minimum pension percentage still applies.

Are earnings tax free after a TTR moves to retirement phase?

Earnings on assets supporting the pension may become exempt current pension income once it is in retirement phase, if the fund claims that exemption. The pension also counts toward your transfer balance account, using the $2.1 million general cap from 1 July 2026 unless your personal cap is different.