Working whilst getting the Age Pension.

Centrelink, specifically the age pension rules for those over age 67 can be quite confusing, that is why it is important to get professional advice around your individual situation. There are a lot of rules. For example, the pension is means tested where your level of assets and income determine how much age pension you get paid.

For this blog, if I will just focus on the income test. There are many different types of assessable income (see here for the full list). In the interest of simplicity I am just going to focus on employment income only in this blog and not consider any other sources of income.

Currently, as a single person you can earn up to $212 per fortnight and get the full age pension, it starts to reduce by 50 cents for every dollar over this threshold and cuts off completely at $2,500.80 per fortnight. For a couple (combined) you can earn up to $372 per fortnight and get the full age pension, it starts to reduce by 25 cents (each) for every dollar over this threshold and cuts off completely at $3,822.40 per fortnight.

It may seem that you can’t earn a lot, but this doesn’t take into account something called the “Work Bonus”. It is an extra “free” allowance of work income you can earn before your age pension starts to get affected. Before Centrelink start taking into account the above income test limits, they will disregard the first $300 per fortnight of income you earn. So, for a single person instead of the income limit of $212 per fortnight, it is more like anything over $512 per fortnight before you age pension starts to get affected (taking into account employment income only in my example).

If you don’t use the $300 p.f. (i.e. you don’t work for let’s say 2 fortnights). Your work bonus can accrue in an income bank (up to a maximum of $11,800). So that means not working for 2 fortnights you will accrue $600 in your work bonus bank. Technically if you work the following fortnight, you can use your normal $300 p.f. plus the $600 in your bank such that Centrelink can disregard $900 worth of employment income that fortnight.

This is useful if you are on the age pension and might only work around Christmas time for example or you do other seasonal/ad-hoc work. Centrelink are also currently giving you a “booster” of $4,000 to sit in your Work Bonus bank.

Working versus not working when on the age pension shouldn’t solely be around financial decisions. You need to definitely take into account your finances but also health and lifestyle choices. The system like our tax system won’t put you in a worse off position if you work more, it just means you might be left with less/no age pension depending on how much you work. Obviously from a financial standpoint it is better to keep working, and the more you work the more money you will get overall (even if you do get less age pension) but depending on your situation you may need to continue to work due to your financial position and sometimes you might not need to work anymore – everyone is different.