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To TRIS or not to TRIS?

With the super reforms resulting in a lot of pre 30 June advice requirements for your clients, we are now operating under the new regime. One of the major changes under the super reforms was to remove the exempt current pension income (ECPI) that applied to transition to retirement income streams (TRIS).

This change was to bring back the use of TRIS to their original intention, which was to enable clients to gradually ease their way into retirement by supplementing their salary with an income stream payment. The issue was the vast majority of clients were utilising TRIS as a tax strategy, reducing taxable income in their personal name, increasing their super balances but continuing to work full time.

It is important to note that from 1 July 2017:

  1. There will be no grandfathered treatment for existing TRIS in relation to claiming ECPI
  2. Tax payable on TRIS pension payments remains unchanged. Therefore, members over 60 years of age will continue to be eligible for tax-free withdrawals
  3. 1 July 2017, the benefit of TRIS will be limited to those derived from personal tax savings

With the ECPI being removed from the 1 July 2017, it begs the question, is commencing or continuing a TRIS is still worthwhile?

There are three main reasons to commence or continue a TRIS:

  1. Continuing work and increasing income with pension payments
  2. Working fewer hours and topping up income with pension payments
  3. Salary sacrificing into super and receiving pension payments which reduce tax liabilities and increases super balances

Personal tax benefits

The following table shows personal tax benefits for clients, based on three different tax rates, per $1,000 of salary for clients over 60 years of age:

Tax Rate (%) Net income per $1,000 of salary Net con per $1,000 of salary sacrificed Pension required to replace net salary Net benefit
34.5 $655 $850 $655 $195
39 $610 $850 $610 $240
47 $530 $850 $530 $320


Advice should be sought to see if clients can meet a condition of release to access an Account Based Pension and gain access to ECPI on pension balances up to $1.6M per member.

CGT Relief 

Many clients are under the misconception that the once off Capital Gains Tax Relief for 2016/17 only applied to members with pension balances of over $1.6M.
Clients that had Transition to retirement pensions of any balance through 2016/17 will also potentially have access to the transitional capital gains tax relief for superannuation assets affected by the new rules starting on 1 July 2017. This capital gains relief will ensure that any capital gain on affected superannuation assets will be disregarded or deferred to a later time when the asset is sold.

This is a complex area of law that we encourage you to discuss with your Partners Wealth Group specialist directly. Call 1800 333 143 to discuss how we can help.

This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.

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