If you’re around 60 and still working, a Transition to Retirement Income Stream (TRIS) can help you work fewer hours, smooth your cashflow, and boost super tax‑effectively. Here’s how it works, who it suits, and a simple case study to bring it to life.

Key facts at a glance

• Who can start a TRIS? Anyone who has reached their preservation age (currently 60) and hasn’t fully retired. Payments must be made as a non‑commutable income stream (regular pension payments, not lump sums while still working).
• How much can you draw? Minimum 4% of your 1 July (or start‑day) balance and maximum 10% each financial year. (Minimum is pro‑rated in a part‑year; maximum isn’t.)
• Tax on pension payments: From age 60, TRIS payments are generally tax‑free in your hands.
• Tax on earnings inside the TRIS: While you’re still working (i.e., TRIS not yet in “retirement phase”), investment earnings are taxed at up to 15% and do not receive the exempt current pension income (ECPI) treatment.
• When does it become a full retirement‑phase pension? Automatically once you meet a condition of release (for most people: turning 65 or retirement). At that point, earnings become tax‑free inside the fund and the balance counts towards your Transfer Balance Cap.
• Transfer Balance Cap (TBC): The general TBC is $2.0m from 1 July 2025. A non‑retirement phase TRIS doesn’t count to TBC until it moves into retirement phase.
• Contribution caps that interact with TRIS strategies: The concessional cap is $30,000 (FY24–25 and FY25–26). Carry‑forward of unused concessional cap may apply if your total super balance is under $500k.
• Still working? Employer SG continues: The Superannuation Guarantee (SG) rate is 12% from 1 July 2025.

Why consider a TRIS?

A TRIS is often used to keep your take‑home pay steady while you:

1. Reduce work hours (use TRIS payments to top up income).
2. Salary‑sacrifice more into super up to the concessional cap – exchanging marginal tax on salary for 15% contributions tax inside super.
3. Restructure cashflow with offsets/buffers while you finish the last stretch of your working life.

How the strategy fits together (in practice)

• Step 1 – Estimate cashflow: Decide how much income you want to keep taking home if you cut hours.
• Step 2 – Dial up pre‑tax contributions: Increase salary sacrifice (watching the $30k concessional cap, including employer SG).
• Step 3 – Replace income from your TRIS: Draw between 4% and 10% of your TRIS balance to keep your net income steady. From age 60, those payments are generally tax‑free.
• Step 4 – Review annually: Minimum/maximum reset each 1 July; revisit settings after any condition of release (e.g., turning 65) because the tax treatment and TBC position change.

Case study: Chris (60) uses TRIS to keep cashflow steady and boost super

Profile

• Age 60, salary $100,000, plans to reduce to 4 days/week.
• Super balance $600,000 (can allocate $300,000 to a TRIS).
• Goals: keep roughly the same take‑home pay, increase super contributions, and build retirement readiness.

What we set up

1. Salary sacrifice to the cap

• FY25–26 concessional cap = $30,000 (includes employer SG). With SG at 12%, employer contributes $12,000; Chris sacrifices $18,000. (Total concessional = $30,000.)

2. Start a TRIS for income top‑up

• TRIS balance $300,000 → min 4% = $12,000, max 10% = $30,000 available in FY25–26. We set a $12,000 pension to replace some pay lost to salary sacrifice. From age 60, that $12,000 is tax‑free to Chris.

Why it helps

• The $18,000 salary sacrifice is taxed at 15% in super instead of Chris’s marginal rate (saving the difference, subject to individual rates and Medicare). Meanwhile, Chris’s cashflow is topped up with $12,000 TRIS income that’s tax‑free. Over time, more money stays inside super growing at concessional tax rates.

What changes later

• When Chris turns 65 (or retires earlier), the TRIS moves into retirement phase automatically; earnings on that pension become tax‑free and the balance starts counting toward the TBC (general cap $2.0m from 1 July 2025).

Note: This is a simplified example to illustrate the mechanics. Personal tax outcomes vary with income, super components, investment returns and fund fees.

Potential risks & watch‑outs

• Market & sequencing risk: Drawing a pension during downturns can lock in losses. Consider holding a cash/defensive bucket to fund TRIS payments for 12–24 months.
• Minimum/maximum rules: You must draw at least 4% (pro‑rated in a part‑year) and cannot draw more than 10% p.a. Breaches can cause the pension to be treated as if it didn’t exist for tax purposes – an avoidable headache.
• Not in retirement phase (yet): While you’re still working, the TRIS is not in retirement phase – investment earnings are taxed in the fund. If you’re close to meeting a full condition of release (e.g., turning 65), compare a short wait vs starting now.
• Contribution cap errors: Salary sacrifice plus employer SG must stay within the $30,000 concessional cap. High‑income earners may also face Division 293 tax. Check carry‑forward cap availability and track contributions across all funds.
• Insurance disruption: Moving money from accumulation to a TRIS can accidentally switch off or underfund life/TPD/IP cover. Keep enough in accumulation (and premiums funded) or arrange replacement cover first.
• Cashflow creep: It’s easy to spend the extra TRIS income rather than direct savings into super. Without discipline, the strategy can reduce your end balance instead of boosting it.
• Non‑commutable limits: A TRIS generally can’t be taken as a lump sum while you’re still working. If you need large, one‑off cash, plan other liquidity sources.
• Employer SG assumptions: Confirm your employer calculates SG on pre‑salary‑sacrifice ordinary time earnings so your super guarantee doesn’t drop when you increase sacrifice.
• Centrelink & means testing: Starting an income stream can change how your super is assessed once you reach Age Pension age. Get advice if you’re within a few years of eligibility.
• Fees, product rules & admin: Different funds have different pension options, fees, and paperwork. Implementation and ongoing advice costs should be weighed against the expected tax and savings benefits.
• Legislation can change: Super and tax rules evolve. Build in review points so your strategy stays compliant and effective.

Frequently asked quick questions

Can I draw more than 10% from a TRIS?
No – until you meet a full condition of release, 10% is the annual maximum. The minimum is 4% (pro‑rata in a part‑year).

Do I still get employer super while on a TRIS?
Yes. Employers must keep paying Superannuation Guarantee for eligible employees (12% in FY25–26).

Does a TRIS count to my Transfer Balance Cap?
Not until it moves to retirement phase (e.g., at 65 or retirement). Then it does count; the general cap is $2.0m from 1 July 2025.

Implementation checklist

• Confirm you’ve reached preservation age (60).
• Map cashflow: desired take‑home vs salary sacrifice level.
• Start TRIS with an amount that supports a 4–10% draw aligned to your plan.
• Check insurance settings inside super before switching money to pension.
• Review annually each 1 July (new min/max; caps; SG; any condition of release; TBC status).

Final word

A TRIS can be a powerful tool for the final 5–7 working years: it helps you stay flexible, protect cashflow, and build super more efficiently. The best outcomes come from tailored modelling that coordinates your salary, contributions, drawdowns, tax and investment mix.

Let’s consider whether a TRIS is suitable for your situation – Book a free strategy call

Important information (general advice only)

This article contains general information only. It doesn’t take into account your objectives, financial situation or needs. Consider the appropriateness to your circumstances and seek personalised advice before acting. Super and tax rules change, and outcomes depend on your personal situation.