Explained: How much you can earn before losing your Age Pension

For many people, reaching retirement age symbolises the end of working for a living and the beginning of one of the most fulfilling times of their lives. 

Many older Aussies look forward to finishing work for good, excited by the prospect of taking long holidays or spending quality time with their friends and family, particularly if grandchildren are part of the equation.

However, a large number of Australians over the age of 65 actually struggle to get by on what they describe as “inadequate” fortnightly payments, with many resorting to taking on part-time work as a way to earn extra cash to supplement their pension during what should be one of the most enjoyable times of life.

But many people are unsure about the rules when it comes to how much you can earn and how many hours you can work before you begin to lose part of your pension entitlement.

Read more: How does the Aussie age pension compare to those of other countries.

According to the Department of Human Services, the Age Pension’s income test permits pensioners to earn no more than $172 per fortnight before their pension payments are impacted. While couples can take home $304 a fortnight (combined) before incurring any reductions. The pension payment will be reduced by 40 cents for every dollar earned over those amounts. 

However, there is also a way that recipients can increase the amount they’re able to earn without affecting their income from the age pension, by claiming the Work Bonus from Centrelink. The bonus raises the amount pension claimants can earn, without incurring any loss to their pensions, to $250 per fortnight.

To apply for the Work Bonus, pensioners must apply online through their myGov account or by visiting their local Centrelink office, and they are also required to report to Centrelink on a fortnightly basis detailing how much extra income they earned.

Anyone who is earning through employment but brings in less than $250 a fortnight will have their employment income reduced to zero, meaning their pension will not be affected, and the additional Work Bonus allowance will be added to their balance.

Those who earn $250 a fortnight will use up all of their Work Bonus allowance to ensure their pension entitlement does not change, however their Work Bonus balance will remain the same. While anyone who brings in more than $250 a fortnight will have their Work Bonus used to reduce their employment income by $250, with any remaining employment income taken from their Work Bonus balance.

And those who don’t work will have $250 added to their Work Bonus balance every two weeks, up to a sum of $6,500.

Last month the Age Pension was increased by $8.70 a fortnight, to $916.30 for singles, while couples now receive a sum of $1,381.40 a fortnight, due to an increase of $13.20, in line with bi-annual indexation. The limits of the income and assets tests for recipients of the Age Pension were also raised.

Have you worked while receiving the age pension? Did you know you could claim a Work Bonus to increase the amount you could earn?

IMPORTANT LEGAL INFO This article is of a general nature and FYI only, because it doesn’t take into account your financial or legal situation, objectives or needs. That means it’s not financial product or legal advice and shouldn’t be relied upon as if it is. Before making a financial or legal decision, you should work out if the info is appropriate for your situation and get independent, licensed financial services or legal advice.