HESTA chief executive Debby Blakey says this is a significant disincentive for workforce participation among pensioners, many of whom are eager to work at least part-time and as Australia continues to face staff shortages in critical areas such as health.<\/p>\n
\u201cRetirement is changing, but the system hasn\u2019t aligned well with that,\u201d she said. \u201cMany of our retirees are keen to work, not just for financial reasons, but for connection or their mental well-being. Part-time or casual work in retirement helps people retain a sense of purpose and fulfilment, while addressing critical workforce demand and boosting the broader economy.\u201d<\/p>\n
Of HESTA\u2019s 80,000 members currently age-eligible for the pension, about 30,000 remain active in the workforce, with many in the health and community services sector.<\/p>\n
With up to one in four Australians set to be retired by 2050, and skills shortages in areas such as health and aged care, Blakey says now is the time to make sure tax settings do not pose a barrier to those wanting to work.<\/p>\n
\u201cAge pensioners can continue to make significant contributions to the workforce,\u201d she said. \u201cBut there\u2019s no incentive for them to increase their work.\u201d<\/p>\n
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In December 2022, the government introduced changes to the Work Bonus scheme, which allows pensioners to earn more income from working before it affects their payment, raising the amount from $7800 a year to $11,800.<\/p>\n
But Blakey said the work bonus scheme needed to be tied to wage growth. \u201cWe continue to hear stories from members on the pension who would like to work more but are put off by the extreme effective marginal tax rates,\u201d she says.<\/p>\n
Council on the Ageing Australia chief executive Patricia Sparrow said the tax system also needs to be simplified.<\/p>\n
\u201cThe current system is complex, and it\u2019s clear that sometimes older people don\u2019t take up [employment] opportunities because it is confusing, and they\u2019re worried about the impacts,\u201d she said. \u201cMany older people need to supplement the pension to meet their living costs, with a growing number of older Australians carrying mortgage debt. Others want to work because they enjoy it and like contributing to the community.\u201d<\/p>\n
A spokesperson for Social Services Minister Tanya Plibersek said the government, in addition to the Work Bonus scheme, had raised the pension by nearly $5000 since being elected in 2022.<\/p>\n
\u201cLabor knows that age pensioners want the option to work from time to time \u2013 to stay connected to their community and to boost their income,\u201d they said. \u201cSince coming to government, we have made sure that pensioners who choose to work can now keep more of their pension than when we were elected.\u201d<\/p>\n