Age Pension is a benefit paid to older Australians who meet age and residency requirements. For pensioners over Age Pension age, there is a Work Bonus that encourages them to participate in the workforce by allowing them to keep more of their pension when they have earnings from employment. Employment income is a person's income from paid work as an employee in an employer/employee relationship, and does not include self-employment or business income.

Under the new Work Bonus rules beginning on 1 July 2011, the first 250 Australian dollars (AUD) (USD264) of fortnightly employment income will not be counted under the pension income test. Previously, the rules provided that half of the first AUD500 (USD528) of employment income per fortnight (a period of two weeks) was not assessed under the pension income test.

A pensioner over Age Pension age who works and earns AUD250 (USD264) would have been assessed for AUD125 (half of AUD250) under the previous rules. Presently, a pensioner who works and earns AUD250 has no income assessed under the pension income test. For a pensioner over Age Pension age who works and earns AUD600 (USD634) a fortnight, only AUD350 (USD370) will be covered by the pension income test under the new Work Bonus rules.

Implemented at the same time with the new Work Bonus is an "Employment Income Concession Bank" that allows pensioners over Age Pension age to cumulate up to a maximum of AUD6,500 (USD6,865) any unused amount of the AUD250 fortnightly exemption. The income bank amount can be used to offset future employment income from the pension income test.

It is anticipated that the new Work Bonus will benefit pensioners in all types of work, including those who take occasional or seasonal work. By helping age pensioners who work earn more before their pensions are affected, the initiative seeks to encourage older Australians to be actively employed.

Source: http://www.katelundy.com.au/; http://www.finchannel.com/news_flash/Corporate_Social_Responsibility/86597_Delivering_for_Senior_Australians/; http://www.fahcsia.gov.au/

Implementation date: 07.2011