There was some good news for senior Australians in the 2018 Federal Budget last night: it features a major change that is beneficial to many Age Pensioners.
Alongside a host of other measures, the Australian government will extend the Pensioner Work Bonus so eligible seniors can earn more without reducing their entitlements.
Some pensioners may find this to be a positive move, but will it work for you? Let’s start by first understanding what the Pensioner Work Bonus is, and how it operates.
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. Under the current rules, every fortnight $250 is added to a pensioner’s work bonus credit account. This means that you can earn $250 in income every fortnight (up to $6500 per year) as an employee 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.
As an example, Margo is on a pension but she still works as a doctor’s receptionist part time and earns $1300/fortnight. Because she receives $250 work bonus every fortnight she gets a $250 credit – so, Centrelink only counts $1,050 as assessable income for Age Pension purposes.
How the Pensioner Work Bonus is changing
In the Federal Budget, the earnings cap for the Work Bonus will be lifted so that individual pensioners may earn an additional $1,300 per year before losing any pension income
There is good news for previously excluded self-employed seniors. The Pensioner Work Bonus is also being expanded to include self-employed seniors. These Age Pensioners will now be allowed to earn up to $7,800 before losing pension entitlements.
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- an increase in the work bonus means you can earn more without losing Age Pension entitlements.
On the other hand, if you’re a pensioner who doesn’t work then this initiative won’t help you right now. But, it’s good to know in the event that your circumstances change.
Overall, the practical effect of these changes is to increase the potential retirement income for a large cohort of Australian seniors and that’s a measure we support.