A popular strategy used to increase your superannuation balance is to commence a Transition to Retirement (TTR) pension while working, allowing you to take a pension and salary sacrifice into super at the same time. Also known as the ‘income swap strategy’, this tax efficient way of improving your financial position is available to anyone who has reached 55 years and is not permanently retired.
Essentially, the strategy works because on commencing the pension, your existing super balance is transferred out of ‘accumulation’ mode into ‘pension’ mode. This is important because you don't pay tax on your fund's investment earnings in pension mode. Meanwhile, the amount salary sacrificed into super is taxed at the lowest concessional rate available to super funds.
The pension income you receive substitutes the cash salary forgone by salary sacrificing, and the re-contribution of the salary sacrifice amount back into your super fund compensates for the pension payment.