How to pick up extra work without affecting your pension

You may have heard friends and family who get the pension talking about the Work Bonus changes recently. Perhaps they’ve picked up some work during a peak tourism period in your town, or they’ve taken on a few more hours at their part-time job.

The Work Bonus allows pensioners to earn more income from working before it affects their payments. In December, the government introduced changes to the bonus which increased it from $7800 to $11,800, with eligible pensioners receiving a one-off top-up of $4000 to their balance.

The Work Bonus allows pensioners to earn more income from working before it affects their pension.Credit:

These changes are in place until the end of 2023 and apply to pensioners who are old enough to receive the age pension, and includes carer payments and the Disability Support Pension. Payments are still subject to normal work rules.

The Work Bonus operates in addition to the pension income test-free area of $190 per fortnight for singles and $336 per fortnight combined for couples. Most types of income count in the income test, including real estate income from rental properties, or deemed income from financial assets such as savings accounts, shares and superannuation.

This is different to the definition of income for the Work Bonus – it only applies to income you get from employment in and outside Australia, paid leave while still employed, director’s fees and self-employment that involves active participation.

The mechanics are run by Centrelink. For pensioners, the Work Bonus automatically exempts the first $300 of eligible income they get per fortnight. Every fortnight a pensioner doesn’t have eligible income, or has been paid less than $300 from work, they are contributing to their Work Bonus balance.

Any Work Bonus eligible income over $300 will reduce any Work Bonus balance they may have before the income starts to reduce their pension. The excess income won’t affect their pension rate until their Work Bonus balance is used up.

This means that if an eligible pensioner starts work, they can earn an additional $4000 in Work Bonus eligible income before seeing a change in their rate of pension. If they’re already working and have used up all their Work Bonus balance, the $4000 top-up will mean eligible pensioners may have seen an increase in their fortnightly pension since December until that top-up is used up.

Let’s look at an example. Bob is on the pension and works as a casual tour guide, earning $400 a fortnight. He has no income other than the pension, so under the Work Bonus, the first $300 of Bob’s employment income is not assessed, and only $100 is counted under the pension income test. This amount is less than the pension income test-free area of $190 a fortnight for a single pensioner, so Bob will still receive the maximum pension rate.

Pensioners don’t need to apply for the Work Bonus. All they need to do is declare their income. Pensioners can check their Work Bonus balance at any time using their Centrelink online account through myGov.

  • Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. Investors should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

Noel Whittaker is the author of Retirement Made Simple and numerous other books on personal finance. Email: [email protected]

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