The current work bonus system discourages Pensioners from returning to the Workforce, any earnings gained from WORK over $300 per fortnight ($150 per week) before tax, reduces their pension by 50 cents in every dollar.
This discussion is limited to the work bonus system and does not consider the income free allowance from investments etc. as it does not have any influence if a Pensioner decides to work or not.
Facts regarding $4,000 Work Bonus increase
The $4000 one off Work Bonus does NOT increase the threshold a Pensioner can earn without penalty.
The $4,000 increase to the ‘Work Bonus’ accrued balance in 2023 also applies to ‘new’ Pensioners, i.e. their ‘Work Bonus’ bank started with a balance of $4000 increasing accrual cap from $7800 to $11,800.
This $4000 has an actual benefit of $2000 as $2000 would have been received from paid work anyway.
The $4000 Work Bonus increase does not increase the $300 per fortnight threshold on the amount earned without deduction in future years
Work Bonus History
The work bonus was introduced in September 2009 – Not Indexed
Average wage increase since 2009 88%
Pension increase since 2009 66%
Work bonus threshold increase since 2009 20%
Aged Pension Workforce Participation
Aged Pensioners earning >$250 per fortnight as at March 2023 70,892
Aged Pensioners earning >$250 per fortnight pre-covid 99,691
Pension Deduction
A Pensioner working 15 hours per week, 48 weeks per year @ $36.11 per hour has
an annual gross income of $ 26,000
Annual work bonus threshold $ 7,800
Pension deduction applies to $ 18,200
Amount deducted $ 9,100
Gains from 720 hours work $ 16,900
Hourly rate for 720 hours $ 23.47 before tax if applicable
Australian minimum casual rate $ 23.23
Productivity
If pre-covid participation was restored, national productivity would benefit from 28,000 Working Pensioners and alleviate the current workforce shortage.