Retail body pressures government on Age Pension work rules

The push to allow age pensioners to work, without penalty, has been given a valuable boost.

Retail has been ravaged by staff shortages due to COVID and now the leading body for the $360 billion sector has joined the call to change the Age Pension rules to ease the crisis.

The Australian Retailers Association (ARA) wants the next government to make employment income exempt from the Age Pension income test.

Under current legislation, pensioners can work only a minimal amount before their income is subject to heavy penalties. For every dollar earned over a $480 threshold, there is a 50-cent reduction to the fortnightly pension.

It’s a system that several groups, including advocacy body National Seniors Australia (NSA), have been urging the government to change.

Read: Older Australians should be able to work – without penalty

NSA surveyed 4000 age pensioners and found one in five would consider re-entering the workforce, while another 16 per cent already had, mostly due to financial problems exacerbated by rapidly rising living costs.

NSA says many pensioners need to work to survive while others would simply want to enjoy the social aspects of a work environment. Yet they are being penalised financially for doing so.

In New Zealand, pensioners’ payments are unaffected if they choose to work; they simply pay tax on their pension and employment income. As a result, 24.8 per cent of pensioners work in New Zealand, compared with only 2.9 per cent of pensioners in Australia.

ARA chief executive Paul Zahra says there are more than 29,000 job vacancies in the retail sector, which is crippling many businesses and holding back economic growth. Without the usual influx of overseas workers and students, the roles can’t be filled.

Podcast: Working and the Age Pension

A change to the pension rules could unleash an army of older Australians to fill those roles, he says.

“Retail has always been a powerfully diverse employment sector and we need to think more creatively about how we can mobilise new segments of our Australian workforce such as mature age workers and pensioners,” Mr Zahra says.

“We would like to see this as a priority for the federal government immediately following the election.

“Should the new government enact this considered change, a new workforce of pensioners can be unlocked and able to choose work that suits them in an economy that desperately needs their efforts.”

Before the April Federal Budget, several Coalition backbenchers had lobbied Treasurer Josh Frydenberg to change the system to release a ‘grey army’ into the economy.

Read: Downsizing tweaks fail to impress

Mr Zahra says an economic recovery is dependent on a retail recovery and that no broad solutions to staffing issues have been suggested, leaving a big gap in productivity and a stressed workforce.

“Retailers have been consistent in their calls for a solution to the current labour shortages of international students and other visa-holders in the country, formerly key demographics of the retail workforce,” he says.

“Additionally, those on the Age Pension are interested in returning to work from a sense of social duty and responsibility as well. They are a group critical to the fabric of our communities, and this generous sense of social duty should be freely welcomed, rather than significantly constrained by mechanisms such as the Age Pension income test.”

If the threshold was to change, Mr Zahra says existing training programs would quickly give older Australians the skills to join retail workforce.

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Janelle Ward
Janelle Ward
Energetic and skilled editor and writer with expert knowledge of retirement, retirement income, superannuation and retirement planning.
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