In what must be a Pinocchio moment (of which there are many – see this month’s THE SOAPBOX: Does the Government think we’re stupid?), the Government is closing the Pension Bonus Scheme (PBS) to new entrants from 20 September 2009. The reason? The scheme is too complex and not meeting its objectives of encouraging workforce participation.
Hmmm. Hands up if you know about this scheme. This innovative and fairly generous scheme simply suffered from a lack of marketing, which I personally tried to redress by explaining the eligibility rules in my books, Superannuation For Dummies 2nd edition, and Superannuation: Planning Your Retirement For Dummies. Also, whenever I chatted to working individuals in their sixties who were nearing retirement, if appropriate I asked them if they were planning to register for the Pension Bonus Scheme.
The PBS works in the following way: if you are intending to work beyond Age Pension age (65 for men and currently 63.5 years for women), and you expect to receive the Age Pension when you do finally retire, then the Government pays you a tax-free cash bonus upon retirement for working longer.
You need to complete a PBS form to register for PBS membership as soon as you hit Age Pension age, and intend to continue working. By joining the PBS scheme, you may be rewarded with a tax-free payment representing 9.4 per cent of the Age Pension when you defer claiming the Age Pension for at least 12 months, and you satisfy an annual work test (960 hours each year, which is around 18.5 hours each week, on average), although you have flexibility in how you stagger the hours over the year.
You can defer the Age Pension for up to five years and receive up to $34,814.80 as a single person (or up to $29,077.50 each as part of a couple. If you defer for one year, you receive $1,392.60 (or $1,163.10 each tax-free as part of a couple). See table below for full details.
Note: The amount of bonus you can receive depends on how much Age Pension you’re entitled to when you eventually retire. If you’re not entitled to the Age Pension, you receive no bonus. If you’re entitled to a part-Pension, you receive a part-bonus. Further, you must register to become a member of the PBS before your bonus years can start accruing, and you can’t accrue bonus years past the age of 75. You can find out more about this scheme and receive a personal assessment of your bonus entitlements by phoning the Centrelink Customer Service Centre on Freecall 1800 050 004. But hurry, the PBS closes to new members on 20 September 2009.
Maximum amount of Pension Bonus payable
| Bonus years | Single | Partnered (each) |
| 1 year | $1,392.60 | $1,163.10 |
| 2 years | $5,570.40 | $4,652.40 |
| 3 years | $12,533.30 | $10,467.90 |
| 4 years | $22,281.50 | $18,609.60 |
| 5 years | $34,814.80 | $29,077.50 |
Table source: Centrelink
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Copyright Trish Power
Hi - I'm Trish Power and I am the author of 
Bless you Trish.
Centrelink didn’t inform me of the PBS in the first place and now centrelink
didn’t inform of the new arrangements in September 2009.
I simply googled Pension Bonus Scheme and voila there you are.
Thanks for your kind comments Alan.
If you haven’t already checked it out, another helpful article on this topic is: ‘Goodbye Pension Bonus: Hello work bonus’
http://www.superguide.com.au/superannuation-basics/goodbye-pension-bonus-hello-work-bonus
Regards
Trish
Trish – thank you for you ‘down to earth’ explanation of so many of the Gov Tax decisions, etc. Re the Pensioner Bonus Scheme, quite frankly, there is now no incentive what so ever for me (a 57yo single woman) to continue working after the age of 65. If they had maintained the bonus, I would definitely have continued working – full time – and contributed (via paying tax). Not now. I have a friend who was lucky enough to sign up for it – he earns $150,000 plus per year, and has very little super. He is working till age 70 simply to stack as much in super as possible, and get the bonus. Me – on my meserly income of less the $55,000 per year? – the incentive to keep me working? – zilch, nil, zero, nothing.
I don’t believe for one minute the government’s blindshot excuse that they canned it due to its complexities. Rubbish!! I work as a payroll officer doing over 2,000 pays a week, and alot of my time is taken up with answering queries from staff, or filling in forms, for staff (those who – when over 65- applied for the scheme). I often ask them -and not ONE SINGLE one of them has said they planned to stay working over 65. The bonus was the golden lure that kept them working.
Many thanks for your comments. Your insights are illuminating. I encourage you to also write to your local MP about this matter, because it is an election year.
Regards
Trish