Pension rules require urgent overhaul: NSA

A national seniors advocacy group has called on the federal government to change pension rules to allow more pensioners to work. National Seniors Australia (NSA) says  people who want to work are being penalised, which is manifestly unfair.

The call comes after federal Opposition Leader Peter Dutton renewed calls to double the Age Pension Work Bonus limit. That call was one of the key pillars of Mr Dutton’s post-Budget speech.

While welcoming Mr Dutton’s proposal, NSA believes it does not go far enough. In a statement released on Friday, NSA said: “National Seniors Australia welcomes the proposal as a step in the right direction but wants the policy to go further.”

The incumbent Labor government has instituted its own changes to encourage pensioners to work – a one-off increase of $4000 to the Work Bonus. But these are restrictive, according to NSA.

“We were initially supportive of the government’s change, the one-off nature,” NSA said. [But] the one-off nature of the increase means workers have a benefit one year and nothing the next. What we know is that those pensioners who work often keep working long after retirement. Why? Because they need to!”

Meaningful changes to pension rules

Identifying neither party’s measures as a satisfactory solution, NSA has proposed a radical one of its own. It has reaffirmed its previous call for a universal pension. Past calls for a universal pension have met with criticism, notably that it will benefit already wealthy pensioners.

However, NSA says the overall benefits will make a universal pension worth it. The motivation is “not because we want to give millionaires a pension”, the NSA said. Instead, “because a universal pension (with proper tax reform to recoup costs) will be a simpler system for older Australians”.

But will the proposal really make things simpler?

Simple on two fronts

Very much so, according to NSA, in comparison to either of the two main parties’ current policies. Each party’s existing or proposed pension rules present hurdles, it says.

The major drawback of Labor’s one-off increase will be the uncertainty it creates, in the view of NSA. “By making the increase a one-off bonus, this has added more complexity to the system,” it says. This is “leaving older workers confused and worried about breaching the limits and incurring a debt to Centrelink”.

As for the Opposition’s doubling of the Work Bonus to $600, NSA says it still leaves frustrating barriers in place. “No-one wants to waste time reporting income to Centrelink.” The proposal would not remove uncertainty for employers either. They would be faced with pensioner employees saying, “I can work this week, but I can’t next week, because I don’t want to lose my pension.”

This makes “older people an unattractive option for employers”, NSA said. A universal pension would eliminate any such uncertainty, for both employer and employee.

Alternative changes to pension rules

Acknowledging that neither party is currently proposing to adopt a universal pension, NSA has advanced perhaps more palatable alternatives. “But we could do something else if [a universal pension is] a bridge too far for Treasury and Services Australia. We could remove the Age Pension income test and retain the Age Pension assets test.”

Current pension rules use both tests to determine eligibility and rates. Removing the income side of the equation would benefit all, according to NSA. “It will encourage more older people to stay in the workforce – but only those who don’t have significant savings.” That’s because the assets test will still limit the amount of pension they receive, NSA said.

The NSA case for a universal pension is well-argued. Whether that translates to influence over the government and/or the Opposition remains to be seen. Those who believe the proposal has merit are encouraged to contribute to NSA’s Fairness in Retirement Campaign.

Are you frustrated by the pension rules? Do you believe NSA’s proposal for a universal pension is a good idea? Let us know via the comments section below.

Also read: Pensioners in poverty need help, says seniors advocate

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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. A universal pension will not work as it only rewards the wealthy.
    A much better alternative is to tax super fund earnings in pension phase at 10%,
    Then force anybody who has over $3.8 million in super to withdraw the excess, or have earnings above this amount taxed st 47%, i.e the top marginal rate plus medicare. The $3.8 million is double the amount that can be converted to a pension and should be indexed whenever the pension amount is indexed.

    Then you allow the age pension welfare recipients to work but only taper their pension loss at 30% not 50% as it currently stands.

    That would allow age pensioners who are capable and want to work, the opportunity to do so.
    The next step is to automatically index the tax thresholds to CPI. (Of course no politician will do this because it denies them the opportunity to give tax cuts which is simply returning excess taxes paid as a result of bracket creep).

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