In recent times governments have introduced policies to encourage people to remain in the workforce as they approach and reach Age Pension age. One particular initiative that callers to NICRI often enquire about is the Work Bonus which replaced the Pension Bonus Scheme.
The Work Bonus is available to Age Pension recipients and exempts the first $250 of employment income per fortnight (up to $6500 per annum) under the income test, reducing the impact on the Age Pension payment. As the year progresses, any unused Work Bonus balance accumulates and is used to offset income earned later in the year. This can be particularly good for those who continue with casual employment or perform seasonal work.
Let’s look at some examples.
Jack is aged 67 and is still employed. He has reduced his hours to part-time and is eligible for a part Age Pension. He earns approximately $1150 per fortnight but taking into account the work bonus his income is assessed at $900 per fortnight. This means that under the income test Jack receives approximately $125 more Age Pension per fortnight than if the whole $1150 was assessed.
Madge, a retired teacher, is also on an Age Pension and during the end of year school exams, she is employed by the Education Department to assist. During this six-week period she receives $1000 per fortnight. Taking into account the Work Bonus, Madge’s assessable work income is reduced to $750. As Madge hadn’t worked in the financial year up to this point, her unused work bonus amounts that have accumulated was enough to offset the remaining income. Therefore there was no reduction of Age Pension.
The Work Bonus is automatically taken into account as part of the calculation of the Age Pension assessment. This means that you only need to declare your assets and income as per the usual requirements.
For more information visit the Department of Human Services website at HumanServices.gov.au.
The National Information Centre on Retirement Investments (NICRI) Inc. is an Australian Government funded, independent consumer agency providing information to the general public on investment products. If you require further information on retirement investments and investing in retirement please contact NICRI toll free on 1800 020110, email [email protected] Information leaflets are also available at www.nicri.org.au.