Last updated June 2011
How would you like an increase in take home pay whilst doing the same job and working the same, or less, hours?
Taxpayers who have reached their preservation age (i.e. 55 for those born before 1 July 1960) can do this by commencing a non-commutable pension stream. These pensions have been nicknamed “Working Pensions” or “Transition to Retirement Pensions”.
By sacrificing some salary into your super fund, and drawing a pension to replace the sacrificed amount, there are tax savings to be made. These tax savings significantly increase where the taxpayer is aged over 60 as there is no tax at all on the pension amount withdrawn.
However, it is relevant to note that this strategy does not work for everyone, and there are some traps if you try to get too greedy (such as if you sacrifice 100% of your wage).
If you would like to explore this idea further, your usual Patison Partners tax advisor can assist.
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