Work Bonus win means more income!
It’s a happy new year for older Australians who want to work and not lose their pension. Here’s why.
National Seniors is on your side
Due to our advocacy, from 1 January 2024 new pensioners can earn an additional $4,000 without losing 50 cents in the dollar from their pension.
Welfare recipients will also get to hold onto their concessions for longer if they get a job.
Currently, a job seeker who finds work can retain access to government concessions for up to 12 weeks. This will double to 24 weeks from 1 July 2024 to further smooth out the transition to work and avoid unintended consequences if a person loses their job.
We called on the government to let pensioners work and keep more in their pockets and now the $4,000 boost to the Work Bonus will be available for any older people who reach pension age from 1 January 2024.
National Seniors Australia has been a long-time champion for reforms to allow pensioners to earn more income without losing their payment.
That’s why this new year we’re celebrating the fact that new working pensioners are up to $2,000 better off because of National Seniors’ efforts to reform pension working rules.
On 1 January, all new pensioners will have $4,000 added to their Work Bonus balance.
It’s a victory for older Australians and for National Seniors in our ongoing campaign to remove barriers to Australians who want to work in later life.
How the new system operates is complicated, but the good news is you do not need to apply separately for any part of the Work Bonus. As with other Age Pension obligations, you just need to declare your income.
You can see your Work Bonus balance online at any time through the myGov/Centrelink portal.
Here are some examples of the application of the Work Bonus.
Under existing rules, the first $300 of fortnightly income from work is not counted under the pension income test, with any unused part of the $300 fortnightly Work Bonus accrued in a Work Bonus income bank.
The $4,000 is a one off addtion to the Work Bonus for new pensioners and is on top of the $7,800 you can earn without impacting your pension. The additional $4,000 is applied at the start of the year to the Work Bonus income bank of new pensioners.
Disappointedly, if you already recieved the $4,000 Work Bonus in 2023 you will not recieve this again up front. However, your Work Bonus can accrue to a maximum of $11,800 because it carries forward over years.
It does mean that those becoming eligible for the pension can work a little bit more without losing their pension but those with ongoing work will not unless they have periods out of the workforce and accrue beyond the old $7,800 limit.
The decision to make the temporary increase in the Work Bonus permanent from 1 January 2024 means a new pensioner can earn $453 per fortnight (on average) in the first year of recieving thier pension and not affect their pension. That might mean you can work an extra shift.
It’s important to also note that the Work Bonus operates in addition to the pension income free area, which is currently $204 a fortnight for single pensioners and $360 a fortnight for couples combined.
If you don’t have any investment income or savings, this would mean a new pensioner could earn even more each fortnight without losing your pension (all told, up to a total of $657 per fortnight for a single pensioner).
Example 1: Bob is an age pensioner working as a school crossing supervisor, earning $400 a fortnight. He has no other income, and a nil Work Bonus income bank balance. Under the Work Bonus, the first $300 of Bob’s employment income is not assessed, and only $100 is counted under the pension income test. This amount is less than the pension income free area of $204 a fortnight for a single pensioner, so Bob will still receive the maximum rate of Age Pension.
Example 2: Maria is an age pensioner who works for three fortnights as an accountant. She has no other income. As Maria has not worked in the previous two years, she has accumulated the maximum Work Bonus income bank amount of $11,800. During the three fortnights that she works, Maria earns $2,000 a fortnight – a total of $6,000. As Maria’s income bank amount is more than her income, none of the $6,000 is assessed under the income test and she will still receive the maximum rate of Age Pension.
In addition, Maria will retain $6,700 in her income bank to offset any future earnings from work ($11,800 - $6,000 earnings + $300 Work Bonus concession for each of the three fortnights that Maria works).
The Work Bonus applies to individual pensioners. It cannot be shared by a pensioner couple.
Example: Mary and Jim are a couple who both receive the Age Pension. Mary has work income of $700 a fortnight and Jim has self-employment income of $220 a fortnight. They have no other income.
Under the Work Bonus, the first $300 of an individual’s income from work is not assessed. Only $400 a fortnight is assessed as income for Mary and nothing is assessed as income for Jim. Under the pension income test, pensions are reduced by 50 cents for every $1 of income over the income free area. Mary and Jim’s combined assessed income of $400 a fortnight is $40 higher than the income free area ($360 a fortnight for a couple) so their combined pensions are reduced by $20 a fortnight ($10 a fortnight each).
If either Mary or Jim were below Age Pension age, they would not be eligible for the Work Bonus.
For more information about the Work Bonus, Services Australia can be contacted by visiting a Centrelink office in person, by phoning 13 23 00 or at Services Australia.
Related reading: NSA Advocacy Win, Let Pensioners Work, DSS, Retirement Essentials
