Changing tax and investment arrangements for Transition to Retirement Income Stream (TRIS) accounts
Important changes to transition to retirement income streams.
A notice regarding the changing tax and investment arrangements for transition to retirement income stream accounts was sent to members from 10 May 2017. The text of the notice is as follows.
We're writing to let you know about important changes to transition to retirement income stream (TRIS) accounts, which will apply from 1 July 2017. These changes are made as a result of the measures announced in the 2016-17 Federal Budget.
Currently, investment earnings are tax free on all retirement income products, including TRISs. From 1 July 2017, TRISs will no longer receive the same tax concessions as retirement income streams, and investment earnings on assets supporting TRISs will be taxed at 15%.
As a consequence of these tax changes, from 1 July 2017 TRIS members will no longer be eligible to invest in the current available investment options. As a result, existing TRIS members will be automatically switched to new investment options. No buy/sell spread will be applied to this transaction. The new investment options are similar to the current options available; however there will be changes to the Indirect Cost Ratio (ICR) due to the change in taxation arrangements.
The new investment options that will be available for TRIS accounts from 1 July 2017 are shown below:
|Investment Option||Target Return||Estimated Indirect Cost Ratio|
|TRIS Aggressive||CPI + 4.5%||1.07% pa|
|TRIS Balanced||CPI + 3.5%||0.73% pa|
|TRIS Income Focused||CPI + 2.0%||0.41% pa|
|TRIS Cash||Bloomberg Ausbond Bank Bill index||0.12% pa|
When you are switched on 1 July 2017, your new investment strategy will be based upon the strategy you have in place immediately prior to the automatic switch taking place:
|Current Investment Option||Investment Option from 1 July|
|Income Focused||TRIS Income Focused|
Moving to a Retirement Income Stream
If you have met a condition of release, you are eligible to convert your current TRIS account to a retirement income stream account. A condition of release includes:
- Reaching your preservation age, ceasing work and not intending to work for more than 10 hours a week in the future (permanently retired). A table that helps you work out your preservation age is available in the CSCri PDS.
- Reaching age 60 and changing employment arrangements
- Reaching age 65 (we will automatically convert you to a retirement income stream when you meet this condition of release).
Retirement income stream members remain in the standard investment options and investment earnings on assets supporting those accounts will remain tax free. This means that if you are eligible to and you move from a TRIS to a retirement income stream on or before 30 June 2017, there will be no changes to your investment arrangements and you will continue to receive tax free investment earnings.
If you move to a retirement income stream after 1 July 2017, you will be switched from the TRIS investment option/s to the corresponding retirement income stream investment option/s and you will receive tax free investment earnings from that point. No buy/sell spread will be applied when you are switched in these circumstances.
You should consider the impacts of the new Transfer Balance Cap before making a decision to convert from a TRIS to a retirement income stream.
You can convert your TRIS to a retirement income stream by completing the Change your Account Details form available from the CSCri website.
The Transfer Balance Cap
From 1 July, a Transfer Balance Cap of $1.6 million will be introduced to limit the amount of money that can be held in retirement phase accounts. The Transfer Balance Cap does not apply to amounts that you have invested in a transition to retirement income stream or in an accumulation account (i.e. PSSap).
The Transfer Balance Cap is applied per person, not per account, so before you convert your transition to retirement income stream, you should consider the balance of any other retirement income products you hold (including the calculated value of any defined benefit pensions you receive) and consider how these may impact your Transfer Balance Cap.
To find out more about the Transfer Balance Cap, visit ato.gov.au and search for ‘QC 50880’
If you have any questions, or require further assistance, please contact a Customer Service Officer on 1300 736 096 between 8.30 am and 6.00 pm Monday to Friday (AEST) or email us at firstname.lastname@example.org
For general information about CSCri, or to access your account using your member number and password, please visit cscri.gov.au