Home / Retiree / Age Pension and seniors concessions / Age Pension Work Bonus: How it works and case studies

Age Pension Work Bonus: How it works and case studies

The Work Bonus is an incentive to keep pensioners in the workforce. If you are eligible, a portion of any income you earn via gainful employment does not count towards Centrelink’s income test.

Under existing Work Bonus rules, eligible pensioners can generally earn up to $300 a fortnight before they lose any of their pension entitlements. 

The government has made a few changes to this program to make it more attractive for people who have reached Age Pension age to participate in the workforce.

First, in September 2022, a temporary one-off credit of $4,000 was added to the work bonus balance of all existing eligible pensioners. The plan was to remove this one-off credit on 1 January 2024. Then in September 2023 the government announced this temporary increase would be made permanent.

This means eligible pensioners can now earn up to $11,800 a year before losing any of their pension.

Retirement planning for beginners

Free eBook

Retirement planning for beginners

Our easy-to-follow guide walks you through the fundamentals, giving you the confidence to start your own retirement plans.

"*" indicates required fields

First name*
This field is for validation purposes and should be left unchanged.

Whether you earn regular employment income or sporadic amounts from a side hustle, please read on. You may be missing out on your Work Bonus and therefore potentially thousands of dollars in additional income.

Here’s how the scheme works.

Watch our video guide below, or continue reading for in-depth detail on how the work bonus works.

Am I eligible?

To be eligible, you must be over Age Pension age and in receipt of a pension payment (Age Pension, Carer Payment or Disability Support Pension).

Unfortunately, not everyone who meets these criteria will benefit from the Work Bonus. That’s because Centrelink applies an income and assets test to determine your rate of payment. The amount paid is the lower rate of the assets and income tests. Depending on your financial situation, your pension could be paid under either test.

The Work Bonus will only benefit those pensioners paid under the income test.

How does it work and what do the changes mean for me?

When you have assessable income (above the income-free area), Centrelink will reduce your rate of pension by 50 cents for every $1 of income (25 cents each per member of a couple).

Generally, the first $300 of work-related income earned each fortnight is not counted towards the income test. This provides a $150 fortnightly boost to your Age Pension if your rate of payment is affected under the income test. If you earn less than $300, you can build up your Work Bonus balance, which can be applied to future earnings.  

Under the recent measures, the disregarded amount is still $300 per fortnight. However, you start with a Work Bonus balance of $4,000, and you can build up your balance to a maximum amount of $11,800.  

For existing pensioners, on 1 January 2024, you will simply retain your existing Work Bonus balance. You would have been allocated the additional $4,000 credits either on 1 December 2022 or when you were granted your pension if your grant was after that date. The plan to reduce your balance back to a maximum $7,800 will no longer occur.  

For those who are waiting for the claim to be processed, or those about to apply, you will automatically be allocated $4,000 credits in your Work Bonus balance from the date your pension starts.  

How can I get the Work Bonus?

When you earn income from work, Centrelink will automatically apply the Work Bonus. This includes employment, paid leave while still employed, directors’ fees and self-employment.

If you are self-employed, you need to let Centrelink know how much of your business income was earned from you actively working or, to use the actual phrase, from your personal exertion. This includes income from work you have performed such as bookkeeping or lawn mowing, but it doesn’t include things like managing your investment property or your share portfolio.  

Supercharge your retirement

SuperGuide newsletter

Get pension and retirement tips and strategies with our free monthly newsletter.

"*" indicates required fields

First name*
This field is for validation purposes and should be left unchanged.

You must keep Centrelink updated with your income to ensure that you are paid the correct amount. Many self-employed people are unaware they should provide Centrelink with their annual tax returns and financial statements each year – within 14 days of them being prepared.

Important: We have met with many clients who did not realise they were missing out on the Work Bonus from Centrelink. A system error within their Centrelink record meant that the $300 per fortnight incentive was not being applied.

Unsure if your self-employment work bonus assessment is correct? Here’s what to do.

Contact Centrelink or visit your local office and get them to check the business details screen. Contained within this screen is a section stating ‘% of income for Work Bonus’.  The percentage recorded should reflect the extent that your share of the profits has come from your own personal exertion. If all your share of the income earned is a result of your personal exertion, this should be 100%. If it is blank, then you are missing out on the Work Bonus incentive. 

Take your latest tax return and profit and loss statement to ensure that the figures are correct and the percentage of earnings is correctly applied. The figures above are only a guide and may not relate to your personal situation.

What if my income is lumpy?

The good news for those pensioners who work on an irregular basis (for example, exam supervisors, Santa at Christmas time) – your Work Bonus is not lost! The amount of unused Work Bonus accumulates in your Work Bonus balance.

For example: You don’t work for 10 consecutive fortnights.

10 fortnights x $300 per fortnight Work Bonus = $3,000 Work Bonus balance accumulation, plus the $4,000 starting balance, means you now have a Work Bonus balance of $7,000.

Should you then earn $3,000 the next fortnight, this would have no impact on your rate of payment AND you still have $4,000 in reserve.

What’s the catch?

The maximum Work Bonus balance that you can accumulate is $11,800. The balance is never reset so once you reach the maximum it will remain at this level until you start to earn income. Additionally, the amount of work bonus credited to you is only $300 per fortnight.

Once your extra bonus amount has been used, the only way to build it back up again is by earning less than $300 per fortnight. So, while during the first 12 months you could earn $450 per fortnight and none of it will count towards the income test, once the bonus $4,000 credits are depleted, you only have the fortnightly $300 work bonus amount available.  

The figures used in the examples below show how the Work Bonus can benefit your rate of pension.

Does investment income count?

No. The only income that can benefit from the Work Bonus incentive is eligible employment income. If investment income (such as rental income) or deemed income is your only source of income and is affecting your rate of payment, there will be no benefit to you from the Work Bonus.

Did you say lump sum bonus?

No, unfortunately not. The Work Bonus is not to be confused with the old Pension Bonus Scheme, which was closed back in 2014.

The old scheme rewarded eligible customers with a lump sum bonus for working past Age Pension age and deferring their Age Pension claim. The new Work Bonus scheme provides a higher ongoing fortnightly pension payment as opposed to a lump sum.

Case studies

Let’s look at some real-life examples of the Work Bonus.

Note: The rates and thresholds used in this article are those that apply from 1 July 2025 to 19 September 2025.

1. The ‘sweet spot’: Maintain maximum rate of pension AND enjoy part-time work.

Jenny is a single pensioner who owns her home but has no financial assets. She enjoys working part time but doesn’t want her pension to be impacted.  

The usual Work Bonus allows her to earn $300 per fortnight, which is on top of the income-free area (see note below) of $218 per fortnight – a total of $518 per fortnight.

If Jenny was to earn more than $300 per fortnight, initially she will be utilising the bonus $4,000 credited to her Work Bonus balance until it is depleted. If Jenny earned $654 per fortnight, for the first 27 fortnights her pension would be unaffected. In the 28th fortnight, her bonus $4,000 would have been depleted. The amount of income over the income-free area plus the fortnightly $300 Work Bonus would now affect her pension. The additional $150 per fortnight would reduce her pension by $75.

Note: The income-free area is the amount of assessable income you can have (from all sources) before your rate of payment begins to reduce under the Age Pension income test.

Jenny can make this work for her in a number of ways. For example:

  • Jenny usually earns $500 per fortnight. She decides to work additional hours over Christmas and Easter and works overtime for four fortnights in December and January. She earns an extra $500 per fortnight during this time. Her total wage for each of these four fortnights is $1,000. She has earned $2,000 extra, but her pension has not been affected as it has simply reduced her Work Bonus balance by $2,000. She goes back to her regular wages, but at Easter time she again earns an extra $500 that doesn’t affect her pension, it just reduces her Work Bonus balance. Next Christmas she can again take on extra shifts to earn up to the $1,500 she has left in her Work Bonus balance and still get her full pension.
  • Jenny plans to continue working for another two years. She knows she can have income of up to $218 per fortnight under the Income-free area, AND $300 per fortnight of earned income before affecting her pension. She works out that over the next two years she can also earn a further $83 per fortnight which will gradually deplete her bonus $4,000 credits. She therefore earns $601 per fortnight and keeps all her pension for two years, after which she finally stops working. She also knows that while she is not working, her Work Bonus balance will be building up again – at the rate of $300 per fortnight until it reaches a maximum of $11,800. If she goes back to work to help out in busy periods, she will be using any built up work bonus balance and so could still keep all her pension payments.   
  • For a couple who are both pensioners the ‘sweet spot’ is $300 per fortnight each of Work Bonus plus a combined income-free area of $380 per fortnight. This means that each member of the pensioner couple could earn $490 per fortnight and still receive the maximum rate of pension ($866.10 per fortnight each). Like Jenny, they each have an additional $4,000 Work Bonus credits that can allow them to earn extra income. How much extra depends on how long they are earning the extra amount for.

2. The ‘large assets’ scenario: Earn even more without impacting your pension.

Jack is a single pensioner who owns his home and has $500,000 in assets. Due to his high level of assets, his rate of pension under the Age Pension assets test is reduced by $535.50 to $613.50 per fortnight.

Remember that Centrelink pays the LOWEST rate of pension calculated under the asset and income tests.

Due to Jack’s high level of assets (which significantly reduce his rate of pension), he can earn a considerable amount of income before switching across to an income-tested rate of pension.   

As Jack’s pension is already reduced to $591.00 per fortnight, he could have employment income of around $1,589 per fortnight ($41,314 per year) before his rate of pension would be affected under the income test. He could also earn additional amounts utilising the bonus $4,000 credits, whether he decides to use a small amount each fortnight over a long period of time, or whether he decides to take a period of full-time work for a short period.  

For a homeowner couple with $800,000 of assets, their rates of pension would be $388.35 each per fortnight.

Under the work bonus rules, they could have ongoing wages of $1,589 each per fortnight and still not affect their rates of pension. If they were to earn more than this, it would initially affect their bonus $4,000 credits. Like the other examples, they can utilise these additional $4,000 credits by earning higher amounts over a short period or smaller amounts over a long period.  

Important: For simplicity’s sake, these examples assume that the assets are non-financial assets.

As part of the Age Pension means tests, financial assets (such as bank savings, shares or superannuation) are ‘deemed’, which means they are assumed to produce a standard rate of income. This deemed income would then reduce the amount of employment income pensioners could earn before affecting their Age Pension.

Learn more about how deeming works.

3. The ‘high income’ scenario: Earn lots and still get a pension (and the Pensioner Concession Card)!

Julie is a single pensioner who is earning $2,000 per fortnight ($52,000 per year) in wages.

The cut-off limit for the income test is currently $2,516 per fortnight (not including the Work Bonus incentive).

Only $1,700 per fortnight of Julie’s wages will count towards the income test (after the Work Bonus has been applied) meaning that she will receive $408.00 per fortnight ($10,608 per year) in pension payments.

As Julie is allocated $4,000 credits from the date she is granted Age Pension, for the first two fortnights her earned income will have no effect on her pension payment as she is using her Work Bonus balance. Note, she is still allocated $300 credits each fortnight, so on the third fortnight, most but not all of her income is counted. By the fourth fortnight, she has depleted the bonus $4,000 credits but will still benefit from the ongoing Work Bonus amount of $300 each fortnight.

She will also benefit from the Pensioner Concession Card discounts (which can be worth thousands).

For a couple who are both pensioners, the amount you could earn before you exceed the income test cut-off limit is $3,844.40 per fortnight combined ($99,954 per year). Provided you are both working and earning at least $300 per fortnight each, this is boosted by an extra $600 per fortnight ($300 x 2 Work Bonus incentives). Then you have the additional $4,000 credits each that allow even more income.

Seek professional advice

The Work Bonus provides an extremely generous incentive to top up a pensioner’s rate of payment. It is vitally important that you confirm with Centrelink that your assessment is correct. If not, you could be missing out on thousands of dollars in pension payments.

We suggest calling Centrelink’s Financial Information Service on 132300 to speak to an expert. This is a free, independent service that provides an amazing service to all Australians.

The Work Bonus is only one aspect of the social security maze. Everyone’s financial situation is different, so it’s important to seek personal financial advice to achieve your own goals and objectives.

The information contained in this article is general in nature.

Upgrade your retirement with a SuperGuide membership

Unlock independent expert guidance to make your super last and boost your income in retirement.
  • Interactive tools and calculators give you power to plan
  • Step-by-step guides help you put plans into action
  • Discover best performing super and pension funds
  • Experts detail tips and strategies to boost your nest egg
  • Comprehensive super rules in plain language
  • Newsletters and webinars keep you on top of the current rules

Find out more


About the author

Related topics,

IMPORTANT: All information on SuperGuide is general in nature only and does not take into account your personal objectives, financial situation or needs. You should consider whether any information on SuperGuide is appropriate to you before acting on it. If SuperGuide refers to a financial product you should obtain the relevant product disclosure statement (PDS) or seek personal financial advice before making any investment decisions. Comments provided by readers that may include information relating to tax, superannuation or other rules cannot be relied upon as advice. SuperGuide does not verify the information provided within comments from readers. Learn more

© Copyright SuperGuide 2008-25. Copyright for this guide belongs to SuperGuide Pty Ltd, and cannot be reproduced without express and specific consent. Learn more

Responses

  1. Stephen J Hall Avatar
    Stephen J Hall

    If I don’t claim the pension from age 65 but keep working full time until I’m 70 and then work part time and claim the pension, does that mean I’ll accumulate 5 years work bonus? Or is is capped, or doesn’t it accumulate while I’m not on the pension?

    Cheers Steve

    1. Robert Barnes Avatar
      Robert Barnes

      Hi Steve – We cannot offer any personal advice or recommendations, so you should check with Centrelink, but it appears that currently the maximum balance you can accumulate, once you are an eligible pensioner, is $6,500.

      Best wishes

      The SuperGuide team

  2. Micheline Avatar
    Micheline

    What if I earn £350 monthly from a pension in The Channel Islands
    Will tha be counted as workbonus ?

    1. SuperGuide Avatar
      SuperGuide

      We cannot give individual advice, but we can provide general information on the topics you raise in your question.

      The Age Pension work bonus applies to the Age Pension income test. The work bonus allows a person to earn up to $250 per fortnight if they’re still working, without this amount being included in their Age Pension income test. A person can therefore still earn up to this amount from working without these earnings affecting their Age Pension rate entitlement.

      It’s important to understand that the work bonus only applies to employment income (excluding self-employment and business income). In other words, it only includes income that is earned from an employer/employee relationship.

      All other income sources are included in your age pension income test to determine your eligibility for the Age Pension. These sources include income from any country in the world, not just Australia.

  3. Rhonda Henry Avatar
    Rhonda Henry

    If I understood correctly, when reading about the work bonus. A pensioner is able to earn $250 per fortnight , without effecting the fortnightly pension amount , if you earn over that , a certain percentage is taken from your fortnightly pension. When I first went on the pension I was told that you could earn $6500 over 12 months, I was also told, that it was a one off and it was not renewed every 12 months . The work bonus explanation,seems to say it is renewed each 12 months. I would appreciate it if you would clear this up for me .

    1. SuperGuide Avatar
      SuperGuide

      Hi Rhonda – This is what Centrelink says:

      If you don’t work, we’ll add $250 to your Work Bonus balance each fortnight. We’ll stop adding the Work Bonus once your balance reaches $6,500.

      So currently the balance of your Work Bonus can be up to $6,500, which is the equivalent of a year. So it’s not a one-off – it’s a maximum balance.

      Best wishes

      The SuperGuide team

  4. Roberto Hapsad Avatar
    Roberto Hapsad

    When I work under the Work Bonus, the employer is obliged to pay super into an account as soon as I earn $450 in a calendar month.
    Since I have retired, the account is new with zero balance, then gradually receives payments.
    But the fund ‘s administration charges quickly reduce my employer’s super deposits to zero. Again and again. Until I go on holidays when my account is considered inactive and is closed.
    When I return to work, The super fund sends me a new bundle of “Welcome to your New Super account” mail. And the merry go round continues.
    I am unhappy about this. So is my fund. My employer is ropeable.
    I wrote to my MP.

Leave a Reply