A more generous Pension Work Bonus was announced in the May 2018 Federal Budget and has now passed into legislation. The change is aimed to help pensioners and other retirees remain employed, active and independent.
What is the work bonus currently?
The Work Bonus currently allows age pensioners who receive income from employment to earn up to $250 a fortnight – or $6,500 a year – without it being assessed by Centrelink’s age pension income test.
It applies to employment income earned inside and outside Australia, paid leave while still employed, and directors’ fees. It does not apply to other sources including self-employment income, investments and superannuation income. Pensioners who are self-employed or running a business are currently not entitled to the Work Bonus, but are able to make business deductions from their income.
Changes to the work bonus
Two changes will take effect on 1 July 2019:
- The amount that can be earned from work without affecting eligibility for the Age Pension will rise from $250 to $300 a fortnight
- Self-employed pensioners will also qualify for the Work Bonus for the first time1
Pensioners will also continue to accrue unused amounts of the fortnightly Work Bonus, which can exempt future earnings from the pension income test. The maximum accrual amount will increase to $7,800.
How does the work bonus work?
Pensioners do not have to apply for the Pension Work Bonus, but they must tell Centrelink about changes to their income.
“If you get income from work, we’ll apply the Work Bonus to your income test,” the Department of Human Services says.
A partner’s assessable income is also reduced if they are a pensioner of pension age and earn money from work. You can’t use your Work Bonus for your partner’s wages. However, applying the Work Bonus to your wages will affect your combined income which means your partner may still benefit.
1 Media Release 14/2/19 – The Hon Paul Fletcher MP, Minister for Families and Social Services.
2 Department of Human Services work bonus information page: www.humanservices.gov.au/individuals/services/centrelink/work-bonus. Accessed 21 May 2019.