How to start a TRIS pension (Transition to retirement income stream)

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Modelling TRIS

Pathfinder can model an existing or new transition to retirement income stream, or TRIS (formerly known as Transition-to-Retirement (TTR) pensions).

Entering data for a TRIS

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  1. If the individual has already started a TRIS:

    1. Go to the Current situation step (top menu), then the Super and Trusts step.

    2. Add the super account and then the investment to the super fund
    3. The individual's current TRIS balance should be entered in the Pension phase balance field
  2. To let Pathfinder automatically start a transition to retirement income stream To allow a TRIS to be included in the strategy:

    1. Go to the Cash flows & Goals step, then the Retirement planning sub-step

    2. For the selected individual, for the Allow transition to retirement field, choose the .  If the robot icon is chosen, a transition to retirement income stream will be started if the individual is eligible to do so and if it is required to meet expenses and/or it will maximize total wealth under the given assumptions. You should check the results to ensure it is consistent with the Individual risk profile.

    3. Pathfinder will calculate the TRIS in order to meet expenses, so ensure that you have entered all expenses at the Cash flows & GoalsCash flows step.



TRIS in the results

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In the results, you can see the TRIS in the following places:

  1. At the Strategy summary step, in the Retire section for the individual, there will be a bullet point if the individual starts a TRIS.
  2. At the Cash flows & Action items step:
    1. In the Cash flows report, the TRIS will be listed in the Revenue section with a row called 'TRIS payment'
    2. In the Action items, there will be an action item in the year the TRIS is started including some information about how much to rollover.  Plus an action item stating the withdrawal amount for every year the TRIS is drawn
  3. In the Detailed reports step, you can see TRIS in the following reports:
    1. Consolidated > Cash flows: There's a line for 'TRIS payment' (note that this will be the total TRIS payments if it is a couple)
    2. Consolidated > Cash flows (detailed): There's a line for 'TRIS payment' for each individual
    3. If the TRIS is drawn from a retail or industry super fund (note that the TRIS is drawn from the pension phase
      1. "Individual name" > "Super fund name" > "Super fund name" Pension > Pension payments
    4. If the TRIS is drawn from an SMSF: SMSF name > SMSF name > TRIS Balances

How to find out what return is being modelled for the TRIS

In the assumptions report, the ‘accumulation phase return’ for the super fund is the return that is also used for the TRIS pension.  This return is assumed to be after tax. In the results, you can check the returns in the detailed reports:

  1. Go to this detailed report: (individual) > (Super fund name)  > (Super fund name) Pension > Assets and loans > Investment – (investment name) > investment return
  2. In the ‘Investment return’ report, there’s two lines: ‘Interest rate’ and ‘Interest rate correction’.  In years where there is a TRIS pension, the sum of these two lines give you the return used. So for example, if the interest rate is 7.40% and the correction is -1.10%, the return is 7.40 – 1.1 = 6.3%, which will match the accumulation phase return.
  3. In the year the individual starts their TRIS or changes from a TRIS to an account-based pension, the correction will be lower because TRIS return only applies for part of the year, so the annual return has been adjusted to reflect this.

Common reasons a TRIS is not started

If you were expecting a TRIS to be started, but the results do not include one, some things to check are:

  • Did you allow a TRIS to be started in the input data?
  • Is the individual actually eligible to start a TRIS? e.g. has not reached their preservation age.  You can check the individual's preservation age with the Age Lookup table.
  • Typically, a TRIS is only started if it is required to meet expenses, so it might not be worthwhile for the individual to do so because they can meet their income requirements through other sources. You can review their income at the Results > Cash flows & Action items step.

If you would like to make adjustments to the TRIS (e.g. make it start in a certain year, prevent it in some years), please contact Optimo Financial.