Financial boost to help keep older Australians connected to workforce

Australians on the age pension who want to keep working will be able to earn more before their pension is affected under new laws being introduced by the Albanese government to parliament on Wednesday.

New laws are being introduced into federal parliament to reduce the disincentive for age pensioners to take on paid work.

Laws to reduce financial disincentives faced by age pensioners looking to work will be introduced into federal parliament on Wednesday, a move advocates say goes some way to breaking down workforce barriers for older people.

The bill will bolster the pension Work Bonus by $4000 from January 1, taking the new maximum balance to $11,800 in paid work before age pension levels begin to be affected.

It allows age pensioners, currently entitled to receive $300 per fortnight before their pension starts to be reduced, to bank unused amounts of this concession to a maximum $11,800, to be used to offset future work income.

About 2.8 million pensioners over the age pension age and war veterans would be eligible. Last year about 125,000 pensioners over the age pension age, including disability support pensioners, had private earnings from employment or a business venture.

The new legislation would also see all new age pension recipients, around 195,000 each year, credited with $4000 in their Work Bonus income balance, enabling them to maintain a connection to work when first drawing the pension rather than giving up work entirely.

Social Services Minister Amanda Rishworth said the new bill would address barriers faced by older workers looking to stay in or re-enter the workforce, especially for short-term or casual opportunities.

“Many older Australians are choosing to supplement their Age Pension with paid work – and good on them,” Ms Rishworth said. “We need to make sure the system is incentivising older Australians to work if they want to. No one should be financially disadvantaged by staying in the workforce longer, or returning … after some time away.”

Social Services Minister Amanda Rishworth. Picture: NCA NewsWire / Martin Ollman

National Seniors chief advocate Ian Henschke said permanently increasing the Work Bonus to $11,800 was very welcome as it “puts money into the pockets of working pensioners”.

“But it’s still a snakes-and-ladders, bonus-and-penalty bureaucratic process,” he said. “We need to get rid of participation barriers for older people, especially in healthcare and social assistance where many are suited to work, and where there are currently 73,000 job vacancies.”

Council on the Ageing chief executive Pat Sparrow said the proposed legislation was “a good first step”.

“There’s still work to be done on simplifying the system, including better aligning it with the personal tax income system, but we’re hopeful it will allow some older workers … to get back into the workforce,” Ms Sparrow said.

“Not every older person wants to go back to work or continue to work, but there are certainly many who do, and it’s important we break down the barriers, like ageism, that are keeping them out of the workforce.”

The changes would also apply to those receiving veterans pensions.

“The ability to undertake meaningful work has been shown to benefit the health and wellbeing of veterans following their military service,” Veterans’ Affairs Minister Matt Keogh said.

“Veterans bring to the civilian workforce so many great skills they’ve gained in the ADF. This will ensure our community continues to benefit from their wealth of experience.”