What would it take to make you want to work again?
Higher wages? Manageable hours? Or a guarantee that your benefits and entitlements would not be jeopardised?
Or maybe all of the above?
In short, what would it take to lure you back into the workforce?
Many of our readers receiving Age Pension payments frequently express frustration at the disincentives they face when looking to earn a few extra dollars.
These disincentives make little sense. Australia is experiencing a labour shortage so encouraging older Australians to either delay retirement, or return to work in some capacity, could benefit everyone. The skills shortage would be reduced, older Australians would have higher incomes and they would most likely spend a little more, thus fuelling the economy.
That’s why we were pleased to hear the recent announcement from Treasurer Jim Chalmers that some of these disincentives would be reduced. In essence, these changes will provide opportunities for older Australians to enjoy a higher level of income in retirement. So what do you need to know about the Work Bonus changes if you are receiving the Age Pension?
If you find a new job…
A new job can mean that you earn too much, and therefore ‘fail’ the income test for Age Pension entitlement. If your job means that you are no longer eligible to receive any Age Pension, you will still be able to retain various supplementary benefits for 24 weeks, up from the current 12 weeks during what is known as the employment nil rate period. Examples of the supplementary benefits impacted include child subsidies, pensioner education supplement and language literacy supplements. This “nil rate” period applies to various payments such as the Age Pension, Jobseeker and the DSP. You can also retain concession cards during this period. Age Pensioners have an even greater advantage as they are able to retain the Pensioners Concession Card for up to 2 years. We reported on this a few weeks ago.
Changes to the Work Bonus
The Work Bonus allows Age Pensioners to earn $300 a fortnight (or $7800 per annum) without any effect on their Age Pension payments. If you earn less than the $300 per fortnight, then the unused amount is credited towards what is known as a Work Bonus Income Bank. The advantage of this ‘Bank’ is that it allows you to earn in excess of $300 if you have any of these ‘credits’ in your ‘Bank’.
The Work Bonus allowance was increased from $7800 to $11,800 during the Covid pandemic. It was due to revert to $7800 on 31 December this year, however it has now been confirmed that the higher amount will remain in force for the foreseeable future.
And there’s more…
From 1 January 2024 all people receiving the Age Pension will have a starting balance of $4000 in their Work Bonus Bank. This means you can earn above the $300 a fortnight until your credits have been used up without losing any Age Pension.
So if you are receiving the Age Pension and want to get some supplementary income you can now earn just a bit more without losing any Age Pension.
Retirement Essentials Age Pension Eligibility Calculator factors in the Work Bonus so you can check your entitlements at any time. You may also wish to talk to one of our experienced advisers about other ways to supplement your income or maximise your entitlements.
The rules around the work bonus can be very confusing as you need to be receiving the Age Pension before you can use it. You can book a consultation with one of our advisers to better understand how it can work for you.
How will this change your situation?
Does the higher Work Bonus help?
And is the automatic $4000 credit to your ‘Work Bonus Income Bank’ a positive initiative?