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The Work Bonus is an incentive to keep pensioners in the workforce. But it’s not just people on a full pension who stand to benefit. Even those with relatively high assets or high income may be eligible.
Let’s take a look at some real-life examples of the Work Bonus.
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 wants to work but doesn’t want her pension to be impacted.
The Work Bonus allows her to earn $300 per fortnight, which is on top of the income-free area of $178 per fortnight.
Jenny could earn $478 per fortnight gross employment income and still receive $952.70 per fortnight pension (the maximum rate).
Her total cashflow would be $1,430.70 per fortnight ($37,198 per year).
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 $316 per fortnight. This means that each member of the pensioner couple could earn $458 per fortnight and still receive the maximum rate of pension ($718.10 per fortnight each).
The combined total cashflow in this scenario would be $2,352.20 per fortnight ($61,157 per year).
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 of assets. Due to his high level of assets, his rate of pension under the Age Pension assets test is reduced to $256.70 per fortnight.
Remember that Centrelink pays the LOWEST rate of pension calculated under the asset and income tests. Learn more in SuperGuide article Am I eligible for the Age Pension?
Due to Jack’s high level of assets (which significantly reduce his rate of pension), Jack can earn a considerable amount of income before switching across to an income-tested rate of pension.
In this case, he could have employment income of $1,870 per fortnight before his rate of pension would be affected under the income test.
His total cashflow would be $2,126.70 per fortnight ($55,294 per year).
For a couple with $800,000 of assets their rates of pension would be $120.35 per fortnight.
They could have wages of $1,653 per fortnight each and still not affect their rates of pension.
The combined total cashflow in this scenario would be $3,547 per fortnight ($92,222 per year).
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 $2,066.60 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 $191.70 per fortnight ($4,984 per year) in pension payments.
She will also benefit from the Pensioner Concession Card discounts (which can be worth thousands).
For a couple who are both pensioners the amount that you could earn before you exceed the income test cut-off limit is $3,188.40 per fortnight combined ($82,898.40 per year). Provided you are both working, this is boosted by an extra $600 per fortnight ($300 x 2 Work Bonus incentives).
This takes a combined allowable income up to $3,788.40 per fortnight ($98,948 per year) before you no longer have an entitlement to the Age Pension. That’s an extremely generous range to work within to still obtain a part pension and the Pension Concession Card.
Regan Welburn is the director of My Pension Manager, an administration service specialising in Age Pension applications and dealing with Centrelink. Regan previously worked for Centrelink as a Financial Information Service Officer and has an intricate knowledge of the Social Security system.
The information contained in this article is general in nature.