The federal government has just introduced changes to Services Australia’s Work Bonus. The Work Bonus increases the amount an eligible pensioner can earn from work – either wages or eligible self-employment income – before it affects their Age Pension.
The Work Bonus automatically exempts the first $300 per fortnight you earn from work if you receive an Age Pension. Carer Payment and Disability Support Pension customers who are over Age Pension age and working may also benefit from the Work Bonus, subject to normal work rules for those payments.
Every fortnight you aren’t working, or have been paid less than $300 from work, you are contributing to your Work Bonus balance. This balance can grow until it reaches the maximum of $7800.
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What’s changed
On 1 December, the maximum Work Bonus balance increased. The government has given it a $4000 top-up, taking the total possible balance from $7800 to $11,800. The top-up will stay until 31 December 2023.
This means that pensioners over Age Pension age can earn an additional $4000 in income from work without it having an impact on their pension rate.
Any Work Bonus eligible income over $300 will reduce any Work Bonus balance you may have before the income starts to reduce your pension. The excess income won’t affect your pension rate until your Work Bonus balance is used up.
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The $4000 will be added to your existing Work Bonus balance. This means that if you start work, you can have an additional $4000 in Work Bonus eligible income before you see a change in your rate of pension.
If you’re already working and have used up all your Work Bonus balance, the additional $4000 will mean that you may see an increase in your fortnightly pension from 1 December until you use up the $4000 Work Bonus top-up.
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.
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Case study
For example, Ray returns to work after being off for six months. Ray has a Work Bonus balance of $3900, which increased to $7900 on 1 December 2022. Ray is paid $750 of Work Bonus eligible income in his first fortnight. Services Australia deducts the $300 fortnightly Work Bonus, and then reduces the remaining $450 of Work Bonus eligible income using Ray’s Work Bonus balance. This reduces Ray’s Work Bonus balance to $7450.
What this means is that Ray has been paid $750 from work in the fortnight without having any impact on his Age Pension rate. If Ray continued working and being paid $750 a fortnight, it would take longer for his pension to be affected by his wages.
For more information on the Work Bonus and Age Pension income test, go to the Services Australia website.
Hank Jongen is general manager at Services Australia.
Will the extended Work Bonus make a difference to your life? Is it encouraging you to find work or more work? Why not share your thoughts in the comments section below?
