Pension Reform: Give with one hand, take with the other Pensioners can be forgiven for being befuddled by the pension changes. While there has been some cause for complaint about strict new reporting requirements, these requirements will mean that pensioners with sporadic employment will be worse off.
Previously, Age Pensioners with intermittent work were able to average out their employment income over a period of time. This varied between 13 weeks and a year, and sometimes, income earned from periodic employment was ignored altogether.
With the introduction of the new Work Bonus, an income concession of 50% is granted on the first $500 earned. The only catch is the fortnightly reporting requirements.
Under the old rules, if a pensioner earned over the income free threshold for their pension’s fortnight on a one-off basis, that income would probably have been disregarded for the purposes of the income test, or at least averaged out over some time. Pensioners could earn up to $3,692 for singles and $6,448 for couples per annum without having their pension affected.
Under the new Work Bonus rules, pensioners will start to lose their pension for employment income earned over $284 for singles or $496 for couples per fortnight.
Given that the average Age Pensioner does not carry out full- or even part-time work over a long period of time, and if they do work, generally their earnings are modest, the average Age Pensioner undertaking paid work will be disadvantaged by the change.
Minister Jenny Macklin is correct in saying that some pensioners will be better off under the new system. But, this only applies to those who have a higher income in the first place.
The Minister used the example of a pensioner earning $9000 over a 6 week period. Under the new system, that pensioner will be better of by a little over $400 per year if that was their total private income for the year.
Compare that with a pensioner who earned $1000 in one fortnight and nothing else for rest of the year. They will be worse off by just over $300. If however, Centrelink recognised intermittent periods of work, the problem would be fixed, and Age Pensioners would not be discouraged from doing the odd bit of paid work here and there. Don’t forget that years ago pensioners successfully lobbied for intermittent work to be averaged out over the year.
The new Work Bonus replaces the unsuccessful Pension Bonus Scheme, which rewarded deferral of the Age Pension. The scheme had a very small take-up rate (probably due to the fact that many were not aware of its existence) and did nothing to encourage current Age Pensioners to take up paid work.
However, the new Work Bonus also acts to discourage Age Pensioners from working, not only because of the strict reporting requirements, but also because its structure does not recognise the workforce participation realities for many Age Pensioners.
Media contact: 0410 612 182
Charmaine Crowe
Policy Coordinator
Combined Pensioners and Superannuants Association (CPSA)
Level 9, 28 Foveaux Street Surry Hills NSW, 2010
Phone (02) 9281 3588
Mob 0410 612 182
Fax (02) 9281 9716
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