New working pensioners to get one-off extra $4000 work bonus from January 1

The Work Bonus allows pensioners to earn money from working before having their pensions cut.

The maximum amount was originally $7800 (26 fortnights x $300 which accrued in a "work bank").

If a pensioner earned more than $300 in a fortnight and had money accrued in the work bank the extra amount earned was not counted as income and thus did not cause the pension to be cut by 50 cents in the dollar.

In December 2022 the government introduced a one-off $4000 bonus to the work bank. This increased the maximum work bank to $11,800.

Under changes introduced by the government in the recently released Employment White Paper, new age pensioners will get a $4000 bonus immediately applied to their work bank plus the $300 which accrues fortnightly to a maximum of $11,800.

Existing age pensioners will continue to accrue $300 a fortnight in the work bank to an annual maximum of $11,800 based on an annual amount of $7800 plus whatever they have remaining in their work bank at the end of the year.

In effect it means that those pensioners who picked up a bit of extra work this year thanks to the $4000 bonus, and who will use all their work bank by the end of the year, will go back to an annual amount of $7800 and will have to give up their extra hours or see their pension cut.

The government will also double the employment income nil rate period to 12 fortnights to reduce barriers for income support recipients to take up work by allowing them to retain concession cards and other supplementary benefits for a longer period when they first get back into employment. This will apply to recipients of JobSeeker, Youth Allowance, Austudy, ABSTUDY, Parenting Payment, Age Pension, Disability Support Pension and Carer Payment.

It is designed to address concerns that losing access to concession cards, child-care subsidies and other supplementary payments, or having to reapply and wait for income support if things don't work out, acts as a discouragement to taking-up work, particularly short-term, casual and gig economy work.

This measure is expected to benefit around 138,000 recipients each year.

Treasurer Jim Chalmers said the changes were an investment to help build a bigger, better workforce.

"This is about putting the right incentives in place to get more Australians into work," Dr Chalmers said.

"We want to make sure the stepping stones are in place to enable more Australians to take up a job or work more hours."

Social Services Minister Amanda Rishworth said, "Around 195,000 people commence on the Age Pension each year and will benefit from the $4000 Work Bonus starting balance."

However, while welcoming the one-off permanent increase to the Work Bonus, advocates have said the government could go further.

"The government could reduce the barriers to workforce participation by trialling a targeted reduction in the income test taper rate for workers in the health and social assistance sector (and agriculture). In the health care and social assistance sector there are around 73,000 job vacancies," said National Seniors chief advocate Ian Henschke.

Demand for care and support workers is set to double by 2050. According to the National Skills Commission, there will be a shortfall of 211,000 workers (full-time equivalent) by 2050.

"Older people are dealing with these desperate shortages now. By 2050, it will be their children. They deserve to know someone is going to be there for them, at a time when they need it the most," said Mr Henschke.

Deloitte modelling showed reducing barriers to workforce participation for pensioners would be a win for government and a win for the economy, he said.

"The White Paper is a forerunner to real reform, and we look forward to the release of the National Strategy for the Care and Support Economy."

Paul Versteege Policy Manager for Combined Pensioners and Superannuants said the CPSA would like to see statutory indexation applied to the Work Bonus at the same time as income free areas are indexed.

"CPSA understands that the take-up of Work Bonus is relatively low and believes part of the problem is that onerous and duplicative income reporting requirements cause pensioners to opt out or not opt in at all."

Council on the Ageing (COTA) Australia said addressing the barriers keeping many older people out of the workforce is crucial

"Having a flexible working environment, free of conscious or unconscious biases like ageism is a good first step towards attracting older workers into your workplaces," said acting chief executive Corey Irlam

He said it was good to see commitments in the whitepaper aimed at addressing the issues facing older people including incentives for people to keep working while they receive the Age Pension or government concessions and action to address ageism in the workforce.

"This whitepaper takes important steps towards breaking down some of the barriers keeping older people who want to work out of the workforce," Mr Irlam said.

"Providing incentives for people to keep working while they receive the Age Pension by making the 'work bonus' a permanent feature will make a difference to many older people looking to continue to work.

"We know that systemic ageism is a key reason older people are locked out of the workforce and it's good to see that acknowledged in the employment whitepaper.

"The Treasurer says he wants Australians to be masters of their own destiny. Older Australians want that too, but there are a number of barriers getting in the way of that and many of those barriers boil down to ageism at the end of the day.

For more information on the government's changes, visit the Department of Social Services website.