Transition to retirement

If you’re beginning to look ahead to retirement, it pays to be aware of any transition-to-retirement provisions in your enterprise agreement, as well as any federal entitlements that may be available to you.

If you are a public sector employee, the transition to retirement provisions relevant to you are in outlined in Clause 24 of the Nurses and Midwives (Victorian Public Sector) Single Interest Employers Enterprise Agreement 2024-2028) (public sector agreement).

If you are a public sector employee covered by the Victorian Public Mental Health Services Enterprise Agreement 2020-2024, this is outlined in Clause 27.

If you work in the private, local government, not-for-profit or aged care sectors, I advise you to check your respective enterprise agreements via the member portal for transition-to-retirement provisions.

In the public sector, transition-to-retirement provisions give eligible employees who plan to retire within the next five years an entitlement to apply for transition-to-retirement arrangements that include, but are not limited to:

• a flexible working arrangement
• a reduction in EFT
• a job-share arrangement
• or to work in a position at a lower classification.

Additionally, the transition to retirement provision in the public sector agreement now allows members to use up their accrued long service and annual leave ahead of retirement.

This builds on the existing clause that allows you to use your accrued long service leave or annual leave to reduce your number of days worked whilst preserving your accrual of long service leave at the time of your reduction in salary or hours.

You can also preserve your accrual of long service leave at its previous level if you choose to work in a position at a lower classification / with a lower hourly rate of pay.

Example

Susan is 61 years old and plans to retire at age 65. Susan has been working 0.8 EFT and has accrued 200+ days of long service leave. After implementing a transition-to-retirement arrangement, Susan drops her hours to 0.6 EFT and uses one day of her long service leave every week to maintain her pay at her 0.8 EFT rate. She also continues to accrue long service leave at the 0.8 EFT rate.

Susan will use up her existing long service leave when she reaches 65. But because she has continued to accrue long service leave at the 0.8 EFT rate for four years, she now has additional long service leave. Susan can take this long service leave as paid leave, alongside her accrued annual leave, before ultimately retiring.

What about my super?

Currently it is not legally required that superannuation be paid on leave paid out upon retirement. So members should be aware that while you may continue to receive income from your accrued leave, you may not receive super on this income.

There are also federal Australian Tax Office (ATO) transition-to-retirement rules that may allow you to reduce your working hours without reducing your income. For more information on these, visit the ATO’s website or seek financial advice for your specific situation.

If you have questions about your specific enterprise agreement provisions regarding transition to retirement, submit a query to Member Assistance.