TTR strategy net tax benefit.
Annual tax saved
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Your breakdown
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Boosting super without feeling the pay cut
A transition to retirement strategy is one of the few moves in Australian finance that genuinely lets you have your cake and eat it. Once you reach preservation age, currently 60, you can start drawing a TTR pension from your super while you are still working. The clever part is pairing it with salary sacrifice. You divert a chunk of pre-tax salary into super, where it is taxed at just 15 percent instead of your marginal rate, and you replace the take-home pay you gave up by drawing the TTR pension, which is tax free in your hands after 60. Same money in your bank account each fortnight, more going into super, and a lower tax bill overall. This calculator isolates the heart of that benefit: the tax you save on the sacrificed amount.
Where the saving actually comes from
The arithmetic is a rate arbitrage. Every dollar you salary sacrifice would otherwise have been taxed at your marginal rate, the all-in figure including the 2 percent Medicare levy. Inside super it is hit with the flat 15 percent contributions tax instead. The saving on each dollar is simply the difference between those two rates. For someone on a 39 percent marginal rate, that is 24 cents in the dollar. The tool multiplies your sacrifice amount by that gap to show the annual tax saving. The bigger your marginal rate, the wider the gap and the more the strategy is worth, which is why it tends to suit people in the 37 percent and 45 percent brackets in the run-up to retirement.
Twenty thousand sacrificed on a 39 percent rate
Suppose you sacrifice $20,000 a year and your marginal rate is 39 percent. Outside super that $20,000 would have been taxed at 39 percent. Inside super it is taxed at 15 percent. The 24 percentage point gap, applied to $20,000, is your annual saving.
The chart contrasts the tax taken on that $20,000 under each route. The shaded difference is what stays in your super instead of going to the ATO.
The cap that quietly limits how far you can push it
There is a ceiling on the sacrifice, and it catches people out. The $30,000 concessional contributions cap for 2025-26 includes your employer's compulsory super guarantee, now 12 percent of your salary. So you cannot sacrifice a full $30,000 on top of what your employer already puts in. On a $100,000 salary the employer guarantee is around $12,000, leaving roughly $18,000 of headroom for salary sacrifice before you breach the cap. Go over and the excess is taxed at your marginal rate anyway, which erases the benefit and adds paperwork. The tool caps the sacrifice input at $30,000 as a guardrail, but you should subtract your employer contributions to find your real room to move.
What this number is and is not
Read the result as the tax saving on the contribution side only. Two things sit outside it. First, since July 2017 the earnings inside a TTR pension are taxed at 15 percent, the same as accumulation, so a TTR does not give you the tax-free investment earnings that a full retirement pension does. The benefit is the salary sacrifice arbitrage and the tax-free pension payments, not tax-free growth. Second, drawing a pension while contributing means money is moving in and out at the same time, so the net boost to your balance depends on getting the sacrifice and the drawdown sized correctly. This calculator is for people aged 60 and over who are still working and want to see, at a glance, whether the strategy is worth setting up. A practical tip: the higher your marginal rate, the stronger the case, so it rarely stacks up for someone already in the 16 or 18 percent band.
Common questions
At what age can I start a TTR pension?
From your preservation age, which is 60 for everyone born after June 1964. You do not have to retire or reduce your hours to start one, which is what makes it a transition rather than a full retirement pension. Until you turn 60 the pension payments themselves were not fully tax free, but since preservation age and 60 now coincide, payments are tax free from the moment you can start.
Is there a limit on how much TTR pension I can draw?
Yes. A TTR pension has a maximum drawdown of 10 percent of the account balance each financial year, alongside the usual minimum that applies to all account-based pensions. The 10 percent cap is what distinguishes a TTR from an ordinary retirement pension, and it is enough to replace the take-home pay most people give up through salary sacrifice.
Does a TTR strategy affect my employer super guarantee?
It should not reduce it, but check your arrangement. Your employer must pay the 12 percent guarantee on your ordinary earnings, and a properly structured salary sacrifice is on top of that. Some older contracts calculated the guarantee on the reduced, post-sacrifice salary, which short-changed employees, so confirm your sacrifice is genuinely additional before you commit.