Age Pension Income Test and Earning One Dollar More

Did you give a sigh of relief when you finally became eligible for fortnightly Age Pension payments? We don’t blame you. It can be quite a complicated, time consuming process (unless, of course, you ask Retirement Essentials to assist).

Having gained this important benefit, the last thing you will wish to do is lose it.

So what happens if you tip over the income threshold, say by just a few dollars?

Today we have some good news on this income test and how Centrelink treats those Age Pensioners who earn a little too much.

Here’s how the rules work.

Let’s say you qualified for the Age Pension after you retired and were earning no income from work. Yes, some of your assets are deemed to earn income. As a single, you can earn up to $2332 per fortnight and still receive a pension, as a couple it’s $3568 a fortnight. For the sake of this example, we’ll assume you are single and your deemed income from your assets is $50,000  which is below the current annual threshold for a single person of $60,632.

So you’re pleased to receive your fortnightly payments and the Pension Concession Card that was automatically issued when you became eligible. 

And now you get an offer to return to work. Your expected salary will be $76,000. So even with the Work Bonus credit (currently $11,800) you will tip over the Age Pension income threshold. 

You’ll immediately lose that hard-won pension and your concession card, right? So you may even reject the offer to work and earn the $76,000 even though the extra money would be more than helpful over the next year or so.

No. Not right.

Here’s what our Guru Steven, the hardworking Head of Customer Services Team, has uncovered.  

When the Work Bonus increase came into effect last year, there was another substantial change for those who are on an Age Pension and then begin earning too much income. 

Previously, if you were on the Age Pension and then began working and earning income higher than your relevant threshold, you would get $0 for the first six fortnights (in case it was only a temporary increase). After that, the presumption was made that you were no longer eligible and your Age Pension would be cancelled, along with your Pension Concession Card. If you subsequently reduced your income, you would have to reapply. 

But as of 1 December 2022, rather than cancelling your Age Pension payments,  they are only suspended and can stay suspended for up to two years before being formally cancelled. Yes, you will still lose your fortnightly payments. BUT you get to keep your Pension Concession Card and all associated benefits during the full two years. Within this time, you can simply go back to Centrelink and say, ‘I’ve stopped working now, can I receive Age Pension payments again please’ and they will resume your payment. There is no need to go through the whole application process again, unless, of course, more than two years has elapsed.

This is a significant win for those on an Age Pension, as it takes into account how volatile the job market is. How you can be in a long-term job one day, be retrenched and decide to retire the next, then find suitable work shortly afterwards – and need that extra income.

Yes, there are terms and conditions attached to all Age Pension entitlements but this change is really helpful for those who have already qualified but are making that dollar or two more than the threshold allows. Keeping the Pension Concession Card is in itself a big win – we believe it can save you between $2000 – $3000 per annum.

There’s further information on this link to Services Australia.

And Retirement Essentials can support your need to apply for an Age Pension or to maximise your entitlements in tailored consultations with an experienced adviser.

What about you? Would this ability to ‘over earn’ for a short while help your retirement income situation? Is it a relief to know you wouldn’t have to reapply for an Age Pension if this was the case?