Supporting employment
Work Bonus for pensioners
Elizabeth is a single pensioner who works part‑time at her local library, has a fortnightly income of $150 from her superannuation fund and also receives a part‑rate Age Pension.
From her job at the library, Elizabeth earns around $500 a fortnight.
As Elizabeth is on a part‑rate Age Pension, additional income reduces the amount of pension she receives.
From 20 September 2009, Elizabeth will benefit from the Work Bonus under the new income test arrangements and only half of the income from her library job will be assessed under the pension income test.
This means that Elizabeth will be $125 per fortnight better off just as a result of the new Work Bonus, even after taking into account the tightening of pension income test rules.
Encouraging workforce participation with a Work Bonus
Part‑time work is important to some pensioners, and also brings substantial benefit to the broader community. As demographic change sees an ageing of the Australian population, it will be important that older workers are not discouraged from maintaining this connection.
The Government is encouraging workforce participation by introducing a Work Bonus which treats earned income more generously.
Under the new arrangements, only half of the first $500 of fortnightly employment income will be included in the income test. This means that as a person's employment income increases their pension will reduce at half the rate it otherwise would have. Pensioners can get a maximum benefit of $125 per fortnight under the Work Bonus.
The Government has decided to close the Pension Bonus Scheme to new entrants from 20 September 2009. The Harmer Pension Review found that the scheme is complex and not meeting its objective of encouraging workforce participation. Existing members of the scheme will continue to accrue entitlements under existing rules.
