Pension work test changes: Seniors can earn more before penalties
Article by Jan Fisher courtesy of Your Life Choices.
The federal government will change the pension work test and increase the amount age pensioners and veterans can earn before being financially penalised.
The measure is only temporary and is set to end 30 June 2023.
Prime Minister Anthony Albanese hopes the measure would help to counter widespread labour shortages.
“Some older Australians stay in the workforce longer because they have to – and some do it because they want to, because they love what they do, because their job is part of their identity, a source of friendship and stimulation and pride,” Mr Albanese said in his closing speech to the Jobs and Skills Summit.
Pensioners can earn a maximum of $300 per fortnight to a maximum of $7800 per year without the extra income effecting their pension.
The pension work test change will mean they will be able to earn an extra $4000 this financial year. They can now earn a maximum income of $11,800 before penalties kick in.
According to the Australian Financial Review, 3 per cent of pensioners report earning employment income. Ninety-six per cent have the maximum income bank of $7800, indicating there could be a sizeable pool of untapped workers.
Time to mobilise the ‘Grey Army’
Australian Chamber of Commerce and Industry chief Andrew McKellar said tapping into the ‘grey army’ would help struggling businesses.
“With greater flexibility, pensioners can choose short-term or seasonal work, or take up extra hours each week,” he said.
“We must not overlook the vast pool of talent that is heading for the exits in droves. More than 400 baby boomers are retiring every single day.”
A ‘good start’, but pension work test still a problem
National Seniors described it as a “good start” but criticised the government for not changing the income reporting requirements.
National Seniors chief advocate Ian Henschke said one of the biggest disincentives for age pensioners and veterans to get back into the workforce was the onerous reporting of any income earned to Centrelink, and the fear of losing payments if they got it wrong.
“We are very happy to see the Jobs and Skills Summit take seriously our campaign to let pensioners work as a means of addressing the jobs and skills shortage,” he said.
“However, this new ‘income credit’ still puts the onus on age pensioners to report their income to Centrelink, which is a major disincentive for pensioners to return to work.”
Mr Henschke said the pension work test reporting schedule was akin to being audited every fortnight.
The government will also make it easier to stay in the social security system.
Currently, age pensioners have their connection to social security cancelled after 12 weeks of exceeding the income limit.
The government will speed up legislation to ensure pensioners don’t have to reapply for payments for up to two years. Pensioners will also retain their access to their Pension Concession Card and associated benefits for two years.