18th May 2018
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Centrelink Q&A: Effect of casual work on the Age Pension
Author: Janelle Ward
Centrelink Q&A: Effect of casual work on the Age Pension

John receives a full Age Pension but is about to start some casual work. He wants to know what impact that work will have on his pension and whether he can salary sacrifice into super to limit any reduction in his pension payment.

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Q. John
I have been on the Age Pension for about three years and have been offered a casual position earning about $800 a week. Am I able to salary sacrifice 10 per cent of this income to reduce the effect of the income on my pension? What effect will the income have on my pension? This income will be reduced by $150 to cover board and lodging. My only income will be the pension and this income stream.

A. Because you are of Age Pension age, the value of your super is considered a financial asset. As a result, the increased value of your super will be deemed to earn income and will be assessed when determining your pension payment.

To salary sacrifice into super, you need to pass the work test.

Currently, people aged 65 to 74 must work a minimum of 40 hours in any 30-day period in a financial year in order to keep making contributions to superannuation. That is set to change in July next year.

The asset test limit for a single person receiving a full Age Pension is $456,750. After this point, the pension begins to decrease.

A single person can earn up to $168 per fortnight and still receive a full Age Pension, but if the fortnightly income reaches $1983.20 (excluding the work bonus), the pension will cut out. The work bonus is $250 per fortnight, hence the maximum fortnightly earnings are $1983.20 + $250.

However, if your employment is seasonal or sporadic, you can ‘bank’ your Work Bonus allowance, to a maximum of $6500, which can then be applied when required. This also means that if you have not worked for the whole previous year, you can earn $6500 before your Age Pension is affected. You do not need to apply for the Work Bonus, Centrelink will automatically apply it when your report your income.

From July 2019, an increase to the Pension Work Bonus will allow age pensioners to earn up to an extra $50 per fortnight – or an additional $1300 per annum – without reducing their existing Age Pension entitlement.

The money you pay for board and lodgings will not be exempt from the income test.

For more specific advice, you could make an appointment with a Centrelink Financial Information Services officer to discuss your situation. 

If you have a Centrelink question, please send it to newsletters@yourlifechoices.com.au, and we’ll do our best to answer it for you.

Are you eligible for an Age Pension? Do you know your rights? The RetirePlanner™ tool has all the information you need. 

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    Disclaimer: All content on YourLifeChoices website is of a general nature and has been prepared without taking into account your objectives, financial situation or needs. It has been prepared with due care but no guarantees are provided for ongoing accuracy or relevance. Before making a decision based on this information, you should consider its appropriateness in regard to your own circumstances. You should seek professional advice from a Centrelink Financial Information Services officer, financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances.





    COMMENTS

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    Charlie
    21st May 2018
    11:02am
    I would like to see some genuine casual jobs for pensioners, not the ones that say casual and pay as much as permanent jobs.
    For a person who is really living on the age pension, a casual job of $100 a week would be a huge amount and probably declarable without losing any pension.
    GrayComputing
    21st May 2018
    1:25pm
    It is time for all of us to rant DAILY at our MPs & PM to take action for human decency and a huge stress reduction for pensioners

    NO ASSET TEST FOR A PENSION EVERV AGAIN!
    A pension is not welfare.

    Most economist say we will save taxpayers money by dropping asset testing because of the massive overheads cost in running Centrelink and the 10,000 conflicting rules
    Even poorer New Zealand has a NO ASSET pension so it is cheaper and user friendly,

    Do retired and retiring people really look forward and want 100++ visits to/from Centrelink and be part of 3 million waiting queues and lost calls?

    Does your MP really like being part of the system that allows this indirect abuse of the elderly?

    This abuse is actually sponsored by our government and forced down to Centrelink and borders on a criminal act.

    Why do MPs normally compassionate persons let this Centrelink abuse happen at taxpayers’ expense?

    Some opposition and independent MPs stand to lose their chance at being part of the needed government changes

    We all need to tell our MP that these criminal asset tests for a pension must be dropped now.
    NO ASSET TEST FOR A PENSION EVER AGAIN!
    OnlyGenuineRainey
    22nd May 2018
    6:50am
    So a single person can earn nearly $60K a year and still get a part pension, but a couple earning only $22,500 a year from accumulated assets - bought with money they paid tax on when it was earned - is deprived. Who dreams up these ridiculous unfair rules?
    George
    22nd May 2018
    8:14pm
    Moron political masters, supported by moron bureaucrats with no maths ability, in Canberra - particularly as the changes don't affect them while they live in their bubble away from real life.

    We could save a lot of money from the Budget, pay down the debt super fast, and become a prosperous country - if Canberra is shut down and smaller efficient departments are set up say in Sydney run by qualified people at arms length from politicians but answerable to the people through published targets and outcomes against them.

    Yes, a whole new system, maybe also including Referenda for all major policy directions / decisions to ensure these are in line with what people want.
    sunnyOz
    12th Jun 2018
    12:19am
    This is a doubly wammy.... I am in a similar position to John. Centrelink reduces my pension by the money I earn from my 2-3 day a week job. They take in to account the gross amount to pay me a part pension. If I salary sacrifice some of this wage into super, they AGAIN take this amount into consideration when deeming interest on my super balance. There is no incentive to save into superannuation. I would be better off to not salary sacrifice, and spend the money. Even put it 'under the bed' or spend on home improvements. Even with the miserly $250 a fortnight we are permitted to earn, which they have ever so generously increased by $25 a week - WOW! That is insulting and doesn't give an incentive at all.


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