Grey army of workers stays at home despite better Work Bonus
Work Bonus was meant to get pensioners back into work in great numbers, but Government modelling may have overestimated pensioner enthusiasm.INFORMATION from the Department of Social Services shows that the increase in Work Bonus during the current financial year hasn’t made Age Pensioners return to the workforce in droves.
WORK Bonus allows pensioners to have a job and not lose any pension over the first $300 they make in a fortnight in addition to the ‘income-free area’ for any type of income.
In September 2022 the Government announced that Age Pensioners would be able to earn an additional $4,000 from 1 December 2022 until 30 June 2023 before it affected their pension payments.
Budget Estimates
In the most recent Budget, this was extended, meaning that pensioners using Work Bonus got more time to use this one-off $4,000 Work Bonus credit, which can be earned between 30 June and 31 December 2023.
It appears though that the main (and very deserving) beneficiaries of the Work Bonus special increases were pensioners already working.
It emerged at a Budget Estimates Committee hearing in late May that the rate of Age Pensioners earning employment income was 3.9 per cent in 2020, roughly 97,750 people.
In 2021, it was 3.6 per cent of all Age Pensioners.
In December 2022, it was 3.1 per cent, rising to 3.2 per cent at the end of March this year.
What to make of this?
It’s clear that the expected 75,000 increase in numbers of pensioners gaining employment income hasn’t materialised after six months of the $4,000 increase being on offer.
Not yet, says the Department of Social Services optimistically, saying, “We have to be a bit careful with those percentages because the base is very large. There’s more than 2.5 million Australians who are on the Age Pension, so, in fact, the absolute numbers have actually increased, going from just a bit above 80,000 to 83,000 people”.
There you have it. Three-thousand more pensioners are now using Work Bonus.
That’s 72,000 to go on the most optimistic reading, because it used to be 97,500 and then went down to as low as 80,000.
Even so, the Department of Social Services’ estimate of 75,000 is closer to the mark than the estimate of 450,000 by the Australian Chamber of Commerce and Industry, which back in 2021 claimed there was “an army of older workers, ready and willing to return to the workplace”.
Instead, the Work Bonus increase is benefiting mostly pensioners who were already working. They deserve it, and the Work Bonus increase from $7,800 to $11,800 should be made permanent. Automatic, periodic indexation should also be applied to it.
Income reporting
If the Government wants to increase workforce participation among pensioners, it would do well to review the applicable income reporting requirements. CPSA News earlier reported on a case where a pensioner gave up her job, unable to cope with the stress caused by income reporting requirements.
More recently, a pensioner expressed his views on income reporting to CPSA in a lengthy email:
I am 82 and I help seniors at the local College with their computer, tablet and phone problems. I have worked two hours a week since April 2014. When I started, I informed Centrelink of my income.
I was told by Centrelink that because the income did not change each fortnight, I did not have to report fortnightly.
Now someone who should know better has changed the rules, and I and many others who are in similar situations are inconvenienced by having to report each fortnight for no good reason at all. My employer records my income each fortnight to Centrelink. This makes reporting unnecessary.
I was told by someone at Centrelink that they had many complaints about the above all asking for the rule [to be] changed back. I was also told that a small percentage of people in a similar situation were not informing Centrelink of changes and they have inconvenienced many of us who are obeying the rules.
Why do the majority who do the right thing have to be inconvenienced by a small number?
Someone in Centrelink or the Government should take the bull by the horns and fix this bad decision and return to the old system.
(Please note that an earlier version of this article mistakenly said that a second increase of $4,000 was added to the normal Work Bonus credit of $7,800 per year. This is not the case. Pensioners will only have another six months – from 1 July 2023 to 31 December 2023 – to use the $4,000 credit announced in late 2022. CPSA apologises for the error.)
INFORMATION from the Department of Social Services shows that the increase in Work Bonus during the current financial year hasn’t made Age Pensioners return to the workforce in droves.
WORK Bonus allows pensioners to have a job and not lose any pension over the first $300 they make in a fortnight in addition to the ‘income-free area’ for any type of income.
In September 2022 the Government announced that Age Pensioners would be able to earn an additional $4,000 from 1 December 2022 until 30 June 2023 before it affected their pension payments.
Budget Estimates
In the most recent Budget, this was extended, meaning that pensioners using Work Bonus got more time to use this one-off $4,000 Work Bonus credit, which can be earned between 30 June and 31 December 2023.
It appears though that the main (and very deserving) beneficiaries of the Work Bonus special increases were pensioners already working.
It emerged at a Budget Estimates Committee hearing in late May that the rate of Age Pensioners earning employment income was 3.9 per cent in 2020, roughly 97,750 people.
In 2021, it was 3.6 per cent of all Age Pensioners.
In December 2022, it was 3.1 per cent, rising to 3.2 per cent at the end of March this year.
What to make of this?
It’s clear that the expected 75,000 increase in numbers of pensioners gaining employment income hasn’t materialised after six months of the $4,000 increase being on offer.
Not yet, says the Department of Social Services optimistically, saying, “We have to be a bit careful with those percentages because the base is very large. There’s more than 2.5 million Australians who are on the Age Pension, so, in fact, the absolute numbers have actually increased, going from just a bit above 80,000 to 83,000 people”.
There you have it. Three-thousand more pensioners are now using Work Bonus.
That’s 72,000 to go on the most optimistic reading, because it used to be 97,500 and then went down to as low as 80,000.
Even so, the Department of Social Services’ estimate of 75,000 is closer to the mark than the estimate of 450,000 by the Australian Chamber of Commerce and Industry, which back in 2021 claimed there was “an army of older workers, ready and willing to return to the workplace”.
Instead, the Work Bonus increase is benefiting mostly pensioners who were already working. They deserve it, and the Work Bonus increase from $7,800 to $11,800 should be made permanent. Automatic, periodic indexation should also be applied to it.
Income reporting
If the Government wants to increase workforce participation among pensioners, it would do well to review the applicable income reporting requirements. CPSA News earlier reported on a case where a pensioner gave up her job, unable to cope with the stress caused by income reporting requirements.
More recently, a pensioner expressed his views on income reporting to CPSA in a lengthy email:
I am 82 and I help seniors at the local College with their computer, tablet and phone problems. I have worked two hours a week since April 2014. When I started, I informed Centrelink of my income.
I was told by Centrelink that because the income did not change each fortnight, I did not have to report fortnightly.
Now someone who should know better has changed the rules, and I and many others who are in similar situations are inconvenienced by having to report each fortnight for no good reason at all. My employer records my income each fortnight to Centrelink. This makes reporting unnecessary.
I was told by someone at Centrelink that they had many complaints about the above all asking for the rule [to be] changed back. I was also told that a small percentage of people in a similar situation were not informing Centrelink of changes and they have inconvenienced many of us who are obeying the rules.
Why do the majority who do the right thing have to be inconvenienced by a small number?
Someone in Centrelink or the Government should take the bull by the horns and fix this bad decision and return to the old system.
(Please note that an earlier version of this article mistakenly said that a second increase of $4,000 was added to the normal Work Bonus credit of $7,800 per year. This is not the case. Pensioners will only have another six months – from 1 July 2023 to 31 December 2023 – to use the $4,000 credit announced in late 2022. CPSA apologises for the error.)
