If you’re still working and you were aged 65 or over (or 63.5 or over if you’re a female) before 20 September 2009, and you registered for the Age Pension Bonus by 30 June 2014, and you have not yet claimed the Age Pension, then this article applies to you. If this article applies to you, then on my calculations, you are in your seventies.
If you fall into this age group and you registered for the Age Pension Bonus before July 2014, then you are expecting to receive the Age Pension when you do finally retire.
Note: The Pension Bonus Scheme (PBS) closed to new members from 20 September 2009. If you were eligible before 20 September 2009 (that is, you were still working and aged 65 years or over if a male, or 63.5 years or over if a female), you must have registered by 30 June 2014 to be eligible to receive the PBS.
SuperGuide regularly spread the word about the Pension Bonus Scheme so hopefully most Australians who are entitled to the PBS, applied before the expiry date.
Background: The PBS was a scheme to encourage older Australians to defer taking the Age Pension. The scheme pays a tax-free bonus to eligible individuals who work beyond Age Pension age, provided that they qualify for the Age Pension when they eventually retire. Effective since 20 September 2017, the maximum payment available is just over $51,000 for a single person and just over $77,000 for a couple, when you defer claiming the Age Pension for five years or more, and you’re eligible for the full Age Pension when you do claim your entitlements.
Are you eligible for the Age Pension Bonus?
According to Centrelink, you will be eligible for the Age Pension bonus if you satisfy the following conditions:
- reached Age Pension age before 20 September 2009 (age 65 for men, and age 63.5 years for women), or more specifically, men who were born before 20 September 1944, and women who were born before 1 January 1946.
- continued to work since reaching Age Pension age
- have not yet claimed the Age Pension
- register before 1 July 2014.
If you have registered for the PBS, then the scheme continues to apply for you, subject to meeting the scheme’s work test condition (see later in the article).
Note: Your eligibility for the PBS runs from the time you register, rather than the time you reached Age Pension age.
Tip: According to Centrelink, you may be better off claiming a PART Age Pension now rather than waiting to use the Pension Bonus Scheme. Centrelink recommends that you make an appointment with a Centrelink Financial Information Service Officer (call 13 23 00) to help you make that decision.
So, how does the Pension Bonus Scheme work?
The PBS works in the following way: if you have worked beyond Age Pension age (and you were at least 65 (for men) or 63.5 years (for women) before 20 September 2009), and you expect to receive the Age Pension when you do finally retire, then the federal government pays you a tax-free cash bonus upon retirement for working longer.
You needed to complete a PBS form to register for PBS membership. By joining the PBS scheme, you may be rewarded with a tax-free payment if you wait at least one year (and now into at least your fourth year since registrations closed 30 June 2014) from registering before claiming the Age Pension bonus AND you satisfy an annual work test (960 hours each year, which is around 18.5 hours each week, on average, or, 20 hours a week for 48 weeks), although you have flexibility in how you stagger the hours over the year.
Note: The amount of Age Pension 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 Age Pension, you receive a part-bonus.
Warning: You can’t accrue bonus years past the age of 75. You can defer the Age Pension beyond age 75, but you can only accrue up to five years of the Pension Bonus. As at 20 September 2017 (and applicable until 19 March 2018), the maximum payment is $51,146.80 as a single person (or $38,651.90 each as part of a couple) when you are a member of the PBS for at least 5 years. If you are a PBS member for, say, three years, you receive $18,285.30 (or $13,817.90 each tax-free as part of a couple). See table below for full details.
Maximum amount of Pension Bonus payable
|Bonus years||Single||Partnered (each)|
Table source: Centrelink (payment rates effective from 20 September 2017 until 19 March 2018)
Note: The amount of Pension Bonus payable increases every 6 months (March and September), in line with increases to the Age Pension. You can check out the Age Pension rates in the SuperGuide article Latest Age Pension rates (since September 2017).
Important: You must also satisfy residence requirements to be eligible for the PBS. According to Centrelink you must be:
- an Australian resident on both the day you register, and the day you lodge your claim further down the track
- you must be physically in Australia on both the day you register, and the day you claim the PBS
- an Australian resident for a continuous period of at least 10 years, or for a number of time periods that total more than ten years, with one of the periods being at least five years (unless you’re a refugee, and exceptions related to women losing partners). You can find more information on residency requirements in the SuperGuidearticle How do I apply for the Australian Age Pension?
Residency test alert! From 1 July 2018, the residency test for the Age Pension, and in turn for the Age Pension Bonus Scheme, becomes stricter. You must be an Australian resident:
- for a continuous period of 15 years, OR
- for a continuous period of 10 years, including at least 5 years during your working life (from age 16 through to Age Pension age), OR
- for a continuous period of 10 years and you have proof that you have not received activity tested income support for cumulative periods of 5 years or more.
Note: Exceptions applicable to refugees and women losing partners continue to apply.
For more information on the Pension Bonus Scheme see Centrelink’s special page on its website click here.
For more information on the Age Pension…
- Australian Age Pension: 10 important facts you should know
- Age Pension changes: More Australians entitled to payments since September 2017
- How do I apply for the Australian Age Pension?
- Age Pension age increasing to 67 years
- Latest Age Pension rates (since September 2017)
- Age Pension: Assets test thresholds applicable since September 2017
- Age Pension: Income test thresholds applicable since September 2017
- Age Pension income test: Deeming rates and deeming thresholds