Let’s say you want to keep working, but you’d still like to receive the Age Pension to help with daily living expenses and increasing medical bills as you get older. The government has created the Work Bonus system to make sure that you can receive the Age Pension while you’re still working.
Work Bonus was designed as a reward for hard-working Aussies who decided they didn’t want “65” to mark the end of their productivity.
Am I eligible for Work Bonus?
All pensioners who are over the qualifying age for the Age Pension – which is 65 years and 6 months old in 2017 – are eligible to claim Work Bonus and continue to receive the Age Pension. Both you and your partner (if you have one) can claim the Work Bonus at the same time, if you are both working.
You can get the Work Bonus if you are receiving the following types of employment income:
- Wages paid in Australia and outside Australia
- Leave payments taken while you are still an employee
- Director’s fees
There are some things that don’t count as employment income for the Work Bonus. So if you’re receiving these types of payments, you may not be eligible for the Age Pension because your overall assessable income may be too high:
- Self-employed income
- Leave payments taken after you have terminated your employment
- Payments you receive as a sole trader or in a business partnership
- Investment income including interest or dividends
- Superannuation income stream
How does the Work Bonus work?
The Age Pension’s income test only lets you earn $168 per fortnight before it starts decreasing how much you receive from the Age Pension. What the Work Bonus does is reduces your assessable income for the Age Pension income test. This allows you to earn $250 per fortnight from working, without your Age Pension getting reduced or cut off.
To apply the Work Bonus to your Age Pension, you must:
- Apply for the Work Bonus through your myGov account or at your local Centrelink Service Centre
- Earn enough from working ($250 or more per fortnight)
- Report to Centrelink every fortnight about how much employment income you earned
If you don’t work in a fortnight or you earn less than $250, you will receive the Age Pension. When you don’t work as much, you are building up a Work Bonus ‘balance’ that you can use to keep receiving the Age Pension in a week where you earn more from work than usual.
What about superannuation payments & pensions?
You can begin receiving income from your superannuation fund as soon as you retire and reach the ‘preservation age’ for your fund. If you choose to keep working, you can still receive a “part-pension” called a Transition To Retirement (TTR) pension that comes out of your superannuation fund, if it is an accumulation super fund (not a defined benefit fund).
But just remember, superannuation payments are one type of income assessed under the Age Pension income test. If you earn too much per fortnight from superannuation payments, you may not be eligible to receive the Age Pension.
The preservation age for superannuation is currently between 55 and 60 years old, depending on how old you are now. Use the government’s MoneySmart superannuation and pension age calculator to work out what age you are eligible to access your superannuation and the Age Pension.
Comparing Super funds that are inclusive of income protection? Check out our comparison table below which features a snapshot of the current market offerings for superannuation. Please note that this table is sorted by our star rating (highest to lowest) and is based on the policyholder falling between 50 and 59 years of age, with a super balance of between $250,000 and $750,000.