The Work Bonus means that working pensioners will have the opportunity to earn more money before the Age Pension is affected and has replaced the Pension Bonus Scheme.
In September 2009 the Pension Bonus Scheme was closed to new entrants and a new program, the Work Bonus, was introduced. What is it and how will it affect your retirement plans?
Centrelink assesses eligibility for an Age Pension on your income and assets.
The income test and the assets test are applied and can reduce the maximum pension rate if you are above a set threshold.
The Work Bonus provides a concession for employment income for all workers who earn money after turning Age Pension age (currently 65 for men and 64 for women).
This means the first $250 of an individual's earnings will not count as income under the income test. This doubles for couples where both are working – both parties may have the first $250 of their own employment income not counted.
This could mean up to an extra $125 of pension income a fortnight (approximately $3,250 a year) for single pensioners and double this amount for a couple where both are working.
Why was the Work Bonus introduced?
Under the Federal Government’s Secure and Sustainable Pension Reforms, the Work Bonus was designed to make it more financially beneficial for those over Age Pension age to continue working. Initially seasonal workers were disadvantaged, but new legislation has addressed this issue.
What is the Work Bonus?
Under the Work Bonus, the first $250 of fortnightly employment income is not counted towards the income test. Therefore, $250 can be disregarded in addition to the normal allowable income-free area.
Do I need to claim for the Work Bonus?
Centrelink automatically applies the Work Bonus when you report your fortnightly earnings.
What income is disregarded under the Work Bonus?
Only income derived from salary paid in Australia and outside Australia and director’s fees will be disregarded under the Work Bonus. Income from payments to a principal from sole traders or partnerships, investments and superannuation are not subject to the Work Bonus.
Are my seasonal earning averaged over a full calendar year?
Yes. Changes made to the legislation in July 2011 mean that you can 'bank' unused fortnightly work bonus allowance to a maximum of $6500.
Mariam can’t understand why her Age Pension reduces when her husband earns money.
Dennis has continued to work past the age of 65 but isn’t aware of any ...
The Work Bonus enables older workers to supplement their Age Pension.