SMSF transition to retirement pensions (TRIS) explained: 2025–26 rules and tax

A transition-to-retirement income stream (TRIS) lets an SMSF member access part of their super between preservation age and retirement — without having to actually retire. Since the 2017 reforms it is less tax-attractive than it used to be, but it remains a useful strategy for members aged 60+ who want to top up after-tax income, reduce hours at work, or contribute additional pre-tax salary through salary sacrifice.

Who is eligible?

Anyone who has reached preservation age (60 for everyone born on or after 1 July 1964) can start a TRIS. Unlike an account-based pension, there is no requirement to retire, to be permanently incapacitated, or to have any other condition of release. The TRIS converts automatically to a full account-based pension on retirement, reaching age 65, or meeting another full condition of release.

How much can you draw?

Each financial year a TRIS must pay at least the minimum drawdown (4% under 65) and no more than 10% of the 1 July account balance. The 10% maximum is the key difference from a regular account-based pension. Payments are pro-rated in the year of commencement. Lump-sum commutations are generally not permitted while the TRIS is in non-retirement phase.

Taxation in non-retirement phase

Since 1 July 2017, investment income supporting a TRIS that is not in retirement phase is taxed at 15% — the same as accumulation. This is the change that removed the headline tax benefit of pre-retirement TRIS strategies. Capital gains discount is the standard 10% (one-third of the 15% rate).

Taxation of pension payments to the member

For members aged 60 and over, all TRIS payments are tax-free in the member's hands — the same as a regular pension. For members aged 55 to 59 (a shrinking group as preservation age finishes phasing in), the taxable component is taxed at marginal rates with a 15% offset on the part paid from a taxed source. Most members starting a TRIS today are aged 60+ and pay no personal tax on the payments.

When does a TRIS convert to retirement phase?

Automatically when the member meets a full condition of release: retiring after preservation age, reaching age 65, becoming permanently incapacitated, or notifying the trustee they have ceased a gainful employment arrangement after age 60. At that moment the underlying assets become eligible for the tax-exempt earnings treatment and the TRIS is reported as a credit to the transfer balance account on a TBAR.

Common TRIS strategies

• Working full-time at 60+ and salary sacrificing the cap into super while drawing a TRIS to maintain take-home pay — concessional tax arbitrage even after the 2017 changes
• Reducing to part-time and using TRIS payments to top up earnings to pre-reduction levels
• Funding a specific cost (mortgage, education) without irreversibly retiring
• Starting a TRIS at 60 in preparation for a later automatic conversion to retirement phase at 65

Operational requirements in an SMSF

• Trust deed must allow a TRIS in current SIS Regulations form
• Trustee minute documenting commencement, balance, components, and beneficiary nominations
• PAYG withholding registration if the member is under 60
• Annual minimum and maximum recalculated at 1 July each year
• TBAR lodged when the TRIS converts to retirement phase, not at original commencement
• Actuarial certificate required for the proportion of income that becomes tax-exempt once in retirement phase

Sources: Superannuation Industry (Supervision) Regulations 1994, regulation 6.01 and Schedule 7; Income Tax Assessment Act 1997, sections 307-80, 295-385 and 295-390; Treasury Laws Amendment (Fair and Sustainable Superannuation) Act 2016.