Many Seniors have seen their retirement savings take a hit over the last few months and interest rates are extremely low for those with money in bank deposits. While Seniors are quite rightly focused on their health and safety right now some are also looking for ways to supplement their income. In this article, we outline how the Work Bonus can help Seniors make the most of any additional paid work they do without affecting their Age Pension entitlements. So how does it work?
The Work Bonus applies to anyone who is receiving the Age Pension and works for an employer on a part time, casual or seasonal basis. It also applies to those who are self employed if they meet the active employment participation requirements. The good news is that you don’t have to apply for the Work Bonus, it is automatically applied when you tell Centrelink that you are receiving an income.
What is the ‘Pensioner Work Bonus’?
The Government offers Seniors on the Age Pension an incentive to continue working. The Work Bonus works like a credit account, called your “Work Bonus balance”. Under the current rules, every fortnight $300 is added to a pensioner’s work bonus balance. This means that you can earn $300 in employment income every fortnight (up to $7800 per year) without it counting towards your assessable income. As soon as you apply for the Age Pension the work bonus is automatically added to your account. For couples, the incentive doubles if both are working.
The even better news is that Work Bonus operates in addition to the pension income test free area. From 1 July 2019, for single pensioners, the pension income test free area is $174 a fortnight and for couples combined, it is $308 a fortnight. So depending on your other assets and income you could earn even more before you Age Pension entitlements are impacted
Will it work for you?
Whether or not the Pensioner Work Bonus will work for you will largely depend on how you feel about working in your retirement. If you are someone who likes to ‘keep busy’, or someone who needs the extra income, the work bonus means you can earn more before losing Age Pension entitlements.
On the other hand, if you’re a pensioner who doesn’t work, or you are uncomfortable seeking work in the current Covid 19 environment then this initiative won’t help you right now. But, it’s good to know in the event that your circumstances change..
Excewllent clear concise explanation of the work bonus…thank you…
why is it such a chore..with CL..if you earn any $? it seems like they try to disincentive you..that its a crime to earn extra..put you through ropes etc mod f forms..l cant stand it..gave up doing counselling..really helping people cos of it..
It’s not clear to me. So I can earn another $300 a fortnight, yet it not affect my pension… how? So , I just don’t submit the earnings! ?
Hi Kerrin, you do need to declare your full earnings each fortnight but Centrelink will deduct the $300 work bonus off those earnings when calculating how much pension to pay you so you are only assessed on the remaining amount. CLICK HERE to view Centrelink’s own explanation which includes a couple of example scenarios also that may help make it clear for you.
The reporting requirements seem extensive for a new aged pensioner who plans to earn income, up to the Work Bonus limit, through his existing sole trader business.
Is it easier to close the sole trader business when applying for the aged pension and then earn the Work Bonus repair/service income without an ABN?
He would then only need to report the income as he earns it without submitting business expenses etc.
Hi Mary, thank you for reaching out for help planning your retirement income. For you and anyone else who would like to have a discussion with someone they can trust about the options available we do offer financial advice consultations.
Our financial advice consultations are designed to help you better understand your needs and goals along with the options you can consider to help you achieve those goals. The consultation is online, goes for up to 45 minutes and costs $150.
CLICK HERE to book now.