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Home / In retirement / Working in retirement

What is the Pension Bonus Scheme?

May 1, 2019 by SuperGuide 2 Comments

Reading time: 2 minutes

On this page

  • How could you be eligible?
  • How does it work?
  • What are the Pension Bonus rates?
  • The bottom line

The Pension Bonus Scheme is a tax-free lump sum payment available to people who meet its eligibility requirements. The Scheme has not accepted any new registrations since 1 July 2014. It was designed to reward people for delaying their receipt of the Age Pension by continuing to work.

How could you be eligible?

To be eligible for the Pension Bonus Scheme, you must have:

  • registered for the Scheme prior to 1 July 2014,
  • have been eligible at the time of your registration to receive the Age Pension but elected to delay receiving it,
  • have not received any government income support since you became eligible for the Age Pension (except the Carer Payment or Carer Service Pension), and
  • have passed the work test for at least 12 months from the date of your registration for the Scheme, as well as completed 960 hours of paid work in each subsequent year (which equates to at least 20 hours per week for 48 weeks of the year).

If you’re in a couple relationship and are both registered for the Scheme, only one of you needs to pass the work test to satisfy the Pension Bonus Scheme work test eligibility requirement. If you’re over 75, you can also work to meet this requirement for a younger partner, and vice versa. However, if you both still work, you can’t combine your hours together to meet the work test requirement.

How does it work?

Eligible people who registered for the Scheme prior to 1 July 2014 will still receive their lump sum payment once they first claim and receive the Age Pension, provided that they:

  • do so before 1 July 2019 and haven’t been accruing their Pension Bonus for longer than five years,
  • are aged under 75 (as the Pension Bonus cannot be accrued after that age),
  • have been an Australian resident for at least 10 years (including 5 unbroken years), and
  • are currently living in Australia.

The Pension Bonus should be claimed:

  • within 13 weeks of you or your partner failing to meet the work test, and
  • at the same time an application is made to receive the Age Pension.

What are the Pension Bonus rates?

If you’re eligible, your Pension Bonus amount depends on:


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  • how long you have been a member of the Scheme,
  • your marital status over the Bonus accrual period, and
  • the Age Pension rate you’re eligible for when you first start receiving the Age Pension. If you’re only eligible for a part-pension, you’ll also receive a reduced Pension Bonus.

The table below lists the maximum Pension Bonus payments currently available.

Length of Scheme membership Maximum Pension Bonus if you’re single Maximum Pension Bonus for each partner in a couple
1 year $2,119.90 $1,602
2 years $8,479.70 $6,408.20
3 years $19,079.30 $14,418.40
4 years $33,918.80 $25,632.70
5 years $52,998.10 $40,051.10

Source: Department of Human Services

The bottom line

The Pension Bonus Scheme has been gradually phased out in Australia since 1 July 2014, though existing members of the Scheme can still receive tax-free lump sum payments for a limited time, provided that they meet the eligibility requirements.

The information contained in this article is general in nature.

Learn more about the Age Pension in the following SuperGuide articles:

Age Pension rates (March 2020 to March 2021)

September 18, 2020

Age Pension calculator: How much could you be eligible for?

September 18, 2020

Age Pension income test limits (July 2020 to March 2021)

September 18, 2020

Age Pension assets test limits (July 2020 to March 2021)

September 18, 2020

Case studies: How is the Age Pension assessed?

September 17, 2020

How to maximise your Age Pension

September 17, 2020

Am I eligible for the Age Pension?

September 3, 2020

Deeming rates (and calculator) for the Age Pension income test

July 1, 2020

How does your super affect the Age Pension?

March 1, 2020

What are the Age Pension residency rules?

March 1, 2020

Are you getting your slice of the Age Pension Work Bonus?

November 13, 2019

Retirement age calculator: When can you access your super or the Age Pension?

August 7, 2019

How do I apply for the Age Pension?

July 1, 2019

Related topics

In retirement Working in retirement

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

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Reader Interactions

Comments

  1. Louise Buchly says

    May 20, 2020 at 10:12 am

    What has replaced the Pension Bonus Scheme?
    Both my husband and I have worked 3 years beyond retirement age, myself being 69 and my husband 71.
    We are permanent residents of Australia having been in the country for 13 years and 4 months and have worked in Australia for 13 years.
    We retired on 20th March 2020 and are now claiming the age pension.

    Reply
    • Robert Barnes says

      June 5, 2020 at 9:28 am

      Hi Louise – We are not aware of any scheme that directly replaces the Pension Bonus Scheme.

      Best wishes

      Robert Barnes
      General Manager
      SuperGuide

      Reply

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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.

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