![\"Poorer](\"https:\/\/www.newsbeep.com\/nz\/wp-content\/uploads\/2025\/11\/6e9b919499e0484252976d949a995b319e5e5512.jpeg\")
<\/p>\nThey are assessed under the assets test and receive a fortnightly pension of $671.50 combined, or $17,459 a year. They also get the concession card and benefits. This, along with the $80,000 a year they draw tax-free from super, gives them a comfortable lifestyle.<\/p>\n
Loading<\/p>\n
Now suppose they wanted to earn extra income. At their level of assets, they can earn a total of $67,600 a year without losing any pension. For income test purposes, their super is given a deemed income of $764 a fortnight, or $19,876 a year.<\/p>\n
After subtracting that, they can still earn $47,724 a year without reducing their pension. If they earn that income jointly, perhaps from consulting, their entire income \u2013 super, pension and work \u2013 will be tax-free.<\/p>\n
Now think about Jenny. She has had a tough life and the $100,000 she received from super when she retired at age 60 was quickly eroded trying to build a new life. She\u2019s now 67 and has no assets except a few dollars in the bank.<\/p>\n
Rent is a struggle, but she finds a place for $400 a week \u2013 the government contributes $108 a week in rent assistance, so her net accommodation cost is $292 a week. She qualifies for the full single pension of $30,654 \u2013 a total income of $36,254 a year including rent assistance.<\/p>\n
Jenny is resilient and thinks about looking for a job paying $45,000 a year. This is where her problems start. Because she is income-tested, once her income reaches $218 a fortnight she will lose 50 cents of every dollar earned.<\/p>\n
<\/p>\n
Poorer pensioners must not be punished for trying to make ends meet.Credit: Jessica Shapiro<\/p>\n
She qualifies for the Work Bonus of $300 per fortnight, the equivalent of $7800 a year, which can be saved in the work bonus income bank. Depending on complex rules, she may also get the one-off $4000 bonus credit. Combined, this could allow her to earn an extra $11,400 during her first year\u2019s work before her work income reduces her pension.<\/p>\n
If Jenny does return to work, the $45,000 she earns will be assessed by Centrelink as $33,200, after deduction of the work bonus \u2013 $1277 a fortnight \u2013 so her pension will be cut by $530 a fortnight to $649 a fortnight ($16,874 a year). In her second year working, when the work bonus boost is exhausted, the numbers get worse: her pension will drop to $572 a fortnight.<\/p>\n
And there\u2019s more. A salary of $45,000 plus age pension of $16,874 is assessable income, on which Jenny will pay tax of $10,516 a year. The total cost of returning to work, including loss of pension and tax, is $26,216 \u2013 an effective marginal tax rate of 60 per cent on the salary she is trying to earn.<\/p>\n
Loading<\/p>\n
Think about it \u2014 a wealthy couple can earn nearly $48,000 a year with no effect on their pension or income tax, yet some of the poorest Australians who need to work just to survive are hit with effective marginal rates of around 60 per cent. It\u2019s ludicrous.<\/p>\n
National Seniors Australia (NSA) has argued for many years that employment income should be exempt from the age pension income test. This would simplify the system and encourage older people to remain in the workforce if they need or want to.<\/p>\n
NSA regularly hears from older workers \u2013 nurses, teachers, carers \u2013 who are asked to stay on past pension age but decline because the numbers simply don\u2019t stack up. These are not wealthy retirees; they are people with limited savings who must work to fund a dignified retirement.<\/p>\n
In addition to boosting pensioners\u2019 incomes, NSA argues it would also boost sectors suffering crippling workforce shortages, particularly health and aged care, where experience and maturity are desperately needed.<\/p>\n
Yes, exempting employment income may reduce pension savings on paper. But the economic and social benefits \u2013 including easing workforce shortages in health and aged care \u2013 far outweigh the cost.<\/p>\n
It\u2019s time to end a policy that punishes the poorest for trying to help themselves \u2013 and replace it with one that rewards effort, contribution and dignity.<\/p>\n