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Pension work bonus increase an ‘encouraging step’

Business

National Seniors Australia welcomes a government decision to permanently increase the work bonus for pensioners but says more must be done.

By Miranda Brownlee 9 minute read

An increase to the work bonus for those on the aged pension from $7,800 to $11,800 has been welcomed by National Seniors Australia and would motivate older Australians to take up more paid employment, Minister for Social Services Amanda Rishworth said.

The move, in the Employment White Paper this week, lifted the bonus from 1 January 2024 and gave all new aged pensioners and eligible veterans a starting bonus income bank balance of $4,000 rather than zero, she said.

Existing and new recipients would retain the current elevated maximum Work Bonus balance limit of $11,800 rather than $7,800.

“These changes mean eligible recipients can earn more from work before their pension is affected, broadening their choices and increasing flexibility,” said Ms Rishworth.

National Seniors Australia said the increase showed the government was willing to listen, but it had to go further.

Chief advocate Ian Henschke said the government could reduce the barriers to workforce participation by trialling a targeted reduction in the income test taper rate for workers in the health, social assistance, and agriculture sectors.

“In the healthcare and social assistance sector there are around 73,000 job vacancies,” said Mr Henschke. “Demand for care and support workers is set to double by 2050. According to the National Skills Commission, we will face a shortfall of 211,000 workers (full-time equivalent) by 2050. How are we going to meet demand in the future if we don’t act now to change the policy settings?

“Older people are dealing with these desperate shortages now. By 2050, it will be their children. They deserve to know someone is going to be there for them, at a time when they need it the most.”

The advocacy group said the cost of implementing the white paper policy would be more than offset by the consequences of failing to implement it.

It referred to modelling by Deloitte, which indicated that reducing barriers to workforce participation for pensioners would be a win for the government and the economy.

The modelling showed the risks would be modest and the potential increase in employment would be material.

“The results for the whole economy show that with 10 per cent of age pensioners taking up or increasing their work, the economy would benefit from an additional 209,000 workers and the government would, in fact, receive a small boost to fiscal aggregates,” National Seniors Australia said.

Ms Rishworth also announced that the employment income nil rate period would be doubled to almost six months (12 fortnights) and access expanded to those who entered full-time employment from 1 July 2024.

The government said the measure would address concerns that losing access to concession cards, childcare subsidies and other supplementary payments, or having to reapply and wait for income support if things failed to work out, acted as a discouragement to taking up work.

This measure was expected to benefit around 138,000 recipients each year, particularly those on the JobSeeker Payment and Youth Allowance.

 

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