$4000 WORK CREDIT FLASH IN PAN BUT MAY GET SENIORS WORKING

Seniors shouldn’t get too excited about the $4000 increase in the amount they can earn without losing some of the age pension.

The arrangement is temporary and a use-it-or-lose-it deal that needs to be taken advantage of by the end of this financial year.

The announcement came during the concluding remarks made by Prime Minister Anthony Albanese at the Job and Skills Summit on Friday.

Under the deal, eligible seniors in receipt of a full or part age or veteran’s pension will have an extra $4000 added to their work bonus income bank.

The system currently allows pensioners to earn up to $300 a fortnight before their pension starts to reduce under the effects of the income means test.

There have been no changes to the asset test, so only pensioners affected or likely to be affected by the income test will benefit.

That figure is the gross, before-tax amount and doesn’t include the 10.5 per cent compulsory super payments that might also need to be paid.

The $300 must be derived from employment and can’t be passive income such as rental receipts or investment earnings. Under the system, the fortnightly amount of unused work bonus credit is aggregated each fortnight up to a maximum of $7800 a year.

For example, a pensioner who does temporary or seasonal work could earn that amount before losing part of their age pension at the rate of 50¢ per dollar. For this reason, many have described the income test for those still working as a form of tax.

Seniors groups have previously argued that it dissuades seniors from helping with Australia’s current critical shortage of skilled and experienced workers.

“The measure is designed to enable pensioners who want to work to immediately boost the supply of labour to meet the shortages,” Mr Albanese said on Friday.

The $4000 boost is subject to the passage of legislation and must be used by the end of June next year.

In theory, a pensioner who has been receiving an age pension for a year and has not made use of the work-bonus system already, has $7800 sitting in their work bonus income bank.

Once the legislation is passed, that income bank would be lifted to $11,800.

It means a retiree working over the upcoming Christmas period could earn that amount from employment before losing any pension under the income test.

If the legislation were passed by the end of September a senior could earn about $302 a week over the following 39 weeks until the end of June.

Under changes that took effect a few years ago, the scheme is no longer restricted to just wage or salary earners. Self-employed seniors can also access the scheme.