Calls for change to Age Pension income rules grow

The groundswell of calls to change Age Pension rules to allow older Australians to work without penalty grows ever stronger, with the National Farmers Federation, the Council of Small Business Organisations of Australia and Independent MPs Rebekha Sharkie and Dai Le joining National Seniors Australia in urging the Albanese government to adopt what NSA calls its ‘Let Pensioners Work’ policy.

The cornerstone of that policy is exempting employment income from the Age Pension income test, so pensioners with limited wealth can work without losing their pension and help meet critical labour force shortages. National Seniors Australia (NSA) has called on pensioners to sign a petition supporting its call.

At present, a person receiving the Age Pension can earn $190 per fortnight without affecting their pension payment. This increases to $490 if the extra $300 is obtained through employment. But for every dollar over that, the Age Pension amount reduces by 50 cents, effectively making it a 50 per cent marginal tax rate.

Read: Will a loan affect your Age Pension eligibility?

Ms Sharkie believes that ceiling should either increase or be abolished. She has introduced a motion to Parliament to facilitate that change.

“This scheme will allow thousands of senior Australians to return to the workforce without an enormous tax burden and will help alleviate critical workforce shortages felt by businesses across the country,” she said.

The National Farmers Federation (NFF) supports Ms Sharkie’s call, suggesting that many so-called ‘grey nomads’ would welcome the chance to earn some extra income via fruit-picking while travelling. Farmers’ ability to find workers has been severely compromised by the COVID pandemic, with travel restrictions effectively cutting off the supply of backpackers and foreign workers who would normally take on those roles.

Read: Applying for a credit card on the Age Pension

“Quite often in the peak of the harvest season, that day here and day there is really valuable to the farmers, because it means they can actually get the fruit into the containers and into the shed,” said NFF president Fiona Simson.

Opposition Leader Peter Dutton suggested in July that pensioners could help alleviate the worker shortage, although not everyone thinks pensioners taking on such physical work is a good idea.

Read: Podcast: Working and the Age Pension

Mr Dutton’s call prompted a Twitter backlash, including a remark from one tweeter suggesting tongue-in-cheek that it would be “a win-win. If they live, they provide cheap labour for farmers and if they die, we don’t have to pay them a pension!”

But senior Australian advocate Cherie Romaro says many pensioners want to work. Citing the case of Senior Australian of the Year Val Dempsey, a nurse who says she can work only one day a week without risking the loss of part of her pension, Ms Romaro said: “How ridiculous is this, when we are so desperate for nurses to work around the clock fighting the pandemic?”

“Instead of our pensioners being inactive at home, scared of losing their pittance, we could and should give them a purpose,” she said. “It could be done with one quick stroke of a pen. The government could help to solve the labour shortage hindering our economic recovery.”

Are you a pensioner who wants to work more? Has the income test prevented you from doing so? Why not share your experience and thoughts in the comments section below?

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Andrew Gigacz
Andrew Gigacz
Andrew has developed knowledge of the retirement landscape, including retirement income and government entitlements, as well as issues affecting older Australians moving into or living in retirement. He's an accomplished writer with a passion for health and human stories.


  1. I’m a fit and healthy 75-year-old who is stuck at home twiddling my thumbs ALL because our governments are so far out of touch with reality that they can’t even imagine this scenario.

    It’s time for a major, drastic change to the pension rules in this country. Governments need to rein in their greed and abolish the employment income test and abolish taxing the Age pension altogether.

    Paying tax on earnings from employment SHOULD be enough. After all, we pensioners have already paid tax on our earnings over a lifetime; strangling the “blood out of the stone” in this manner is emotionally and economically cruel as well as totally unnecessary.

    • It’s a free country David so if you want to kill yourself stacking shelves or picking fruit go right ahead, now even the billionaires have to pay tax, thanks to the combined efforts of the Albanese Labor government and The Greens and not before time in my humble opinion.

  2. I am 72, fit and healthy and have been applying for jobs while doing a long term house sit in Hobart. One “grocery chain” have been advertising for “Grocery Team members – stacking shelves and removing expired stock. THEY ADVERTISE “MUST HAVE 12 MONTHS EXPERIENCE!!”

    I have watched some of the existing “young staff” – and they are lazy, inexperienced and downright unproductive!

    Mature age workers bring honesty, experience, productivity, willingness to learn, mentorship for younger workers, timeliness and a smile. The kids today have no idea – yet the employers are paying them the same money we would get paid!! Go Figure!!

  3. Yes, I’d be happy to work more, but when your pension is counted in the income-assets test, any money you have put aside is taxed at unachievable deeming rates and you are taxed at 50c for every dollar you earn, it is clear the whole process is a joke.

    I earned a few thousand (much less than the minimum wage) and we had $140 each cut off our Aged Pensions. After the reduction, we were only $57 a week better off, but that didn’t allow for transport costs, so I gave it away. Much as I could help the economy, why go through all the stress and effort to be no better off.

    The faceless system justifies it as being the rules. Leaves one thinking they should have worked in a cash economy and not bothered paying taxes for 58 years. Makes Ned Kelly look like a saint.

    NZ has a universal pension and pensioners can earn money but then put in tax returns like every other worker. The threshold for paying tax is a bit above the aged pension, so any income is taxed at appropriate rates, not our 50 in the $.

    It works a dream. What is weird, is that NZ has more generous social services offerings, but requires less Work and Income staff to support it than than Services Australia does (when based on per head of population). With a bigger population, we don’t seem to benefit at all. Seem all we can do is create cruel red tape.

    Services Australia says a couple can have 419K in assets. What they hide is that yes, you can have this, but anything over 56K will be calculated in your assets – income test and treated as if it was earning 2.25% interest. Watch as interest rates climb, the deeming rates will be indexed. While we struggled to earn 1% on our savings, they government held fast to the 2.25%, but now there might be some better rates, watch ho quickly they ratchet the deeming rate up.

    Seems our greedy politicians who have a very generous super and our public servants who are also on the gravy train, all see older Australians as expendable. A big proportion of the seniors I socialize with are totally disillusioned by the whole system.

  4. I work 2 shifts a week sitting at a computer so it’s easy for me to work at almost 70. First the government uses my gross weekly earnings instead of the net to calculate how much pension to withold, so they are holding back my pension due to money I never see because it’s paid to them.
    Then I find this year, adding insult to injury, I owe tax as adding my years wages to my pension pushes up the amount of tax I should have paid this last financial year. I have had to ask my employer to take extra tax from my wages each week to cover next year.

  5. Your article states that a “… person receiving the Age Pension can earn $190 per fortnight with affecting their pension payment. This increased to $490 if the extra $300 is obtained through employment.” A few months ago my local Centrelink disallowed this, and stated that it was $300 in total, not in addition to the allowable $180 per fortnight. Their website is unclear. Could you verify this information? Kate

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