Calls to allow older Australians to work more without it affecting their Age Pension entitlements are growing louder as worker shortages continue to bite.
Many businesses are finding it difficult to fill positions with the unemployment rate historically low and migration not yet recovered to pre-pandemic levels.
At the same time, thousands of older Australians are keen to return to work or continue working past Age Pension age for financial and personal reasons.
It would seem logical then, to allow capable older Aussies to fill those positions, without penalty. But there’s a problem.
Under current Age Pension rules, a recipient can earn only $490 before his/her pension payment is cut. In today’s job market, that would equate to one, possibly two days of work a week at most.
And the payment cut is serious. Every dollar earnt above $490 reduces the Age Pension by 50 cents in the dollar, or effectively a 50 per cent tax rate.
Pensioners are able to bank a certain amount of income in their Work Bonus balance, which can be used to offset income received at a later date, effectively increasing the amount a pensioner can earn.
That amount is usually $7800, but has been extended by $4000 to $11,800 until 31 December 2023. Now, seniors advocates are calling for the extension to be made permanent – and the amount increased.
Ian Henschke, chief advocate for National Seniors Australia, told Nine that permanently increasing the Work Bonus amount and introducing further reforms would help address the labour shortage while at the same time giving older Australians the chance to work if they wanted to.
“I think we need to recognise that we’ve got a jobs crisis in Australia with 450,000-plus jobs going … and we’ve got 4.5 million Australians over 65,” he said.
“We need workers desperately in aged care, childcare, home care, disability care and agriculture and tourism and hospitality.
“It will be a win for the industry, a win for the pensioner and a win for the economy.”
The worker shortage has certainly been exacerbated by the pandemic, but the root cause in some sectors is an ageing population.
Demographer Simon Kuestenmacher wrote in the New Daily that in the past decades, a generation retiring was more or less replaced by a new one.
“Over the last decade we … grew our population aged 85+ by 157,000 people,” he said.
“That shouldn’t be a big problem, right? People always retired, and a new generation entered the workforce in their place. This time around, a huge generation retires as a small generation enters the workforce.”
Margaret Anderson, 78, told 9Now that her life wouldn’t be the same without her job at a restaurant.
She is part of a multifaceted team that ranges from 15 to 78-year-olds. “I love the people I’m working with, I love the people I meet,” she said.
“I’ll do this for as long as I can. I love it.”
Mr Henschke believes Australia should adopt a similar approach to New Zealand’s.
“New Zealand’s got a simple system – you work, you pay income tax and they just get on with it,” he said.
Should pensioners be able to work and still get the full pension? Or is that double-dipping? Let us know what you think in the comments section below.
Also read: March 2023 Age Pension increase tipped to deliver spending boost