Change to the Pension Bonus Scheme
Late registrations for the closed Pension Bonus Scheme will end from 1 March 2014 to help ensure our pension system is simpler and more sustainable for older Australians into the future.
The Pension Bonus Scheme provides a lump-sum payment to people eligible for the Age Pension but who choose to defer their pension and remain in the workforce.
As part of the Government’s Secure and Sustainable Pension Reform package in 2009, the Pension Bonus Scheme was closed on 20 September 2009. People who were eligible for the scheme at that time but had not yet registered are currently still able to register.
This provision for late registrations for the Pension Bonus Scheme will cease from 1 March 2014. Eligible people can still register for the scheme before this date.
The Government’s 2009 Harmer Pension Review found the Pension Bonus Scheme did not encourage older Australians to remain in work, with most participants saying they would have continued working anyway. The review also found pensioners thought the Pension Bonus Scheme was complex and inflexible.
In response to this finding and as part of the historic pension reforms in 2009, the Government introduced the new and more effective seniors Work Bonus to encourage older Australians to continue working.
Under the seniors Work Bonus, eligible pensioners can earn up to $250 a fortnight ($6,500 a year) without it being assessed as income under the pension income test.
In addition, any unused amount each fortnight can be used to offset future earnings, up to a maximum of $6,500.
This change has encouraged more pensioners to continue contributing to the workforce past retirement age. In the past 12 months, more than 147,000 age pensioners have been able to work while keeping more of their pension under the seniors Work Bonus.
This reform means that a single age pensioner with no other income can currently earn up to $10,452 a year from employment while still receiving the maximum rate of the pension.
The Government recognises the important contribution senior Australians make to our economy and our community.
That’s why we have introduced a number of other initiatives to help mature age workers stay engaged with the labour market, including:
- establishing the first stand-alone Age Discrimination Commissioner to advocate for the rights of older Australians and to address barriers faced by mature age workers;
- one-on-one assistance for employers who want to recruit and retain mature age workers through the Experience+ Corporate Champions program;
- the Investing in Experience program which supports skilled mature age workers to gain nationally recognised qualifications; and
- the Advisory Panel on the Economic Potential of Senior Australians to advise the Government on how Australia can best harness the social and economic potential of senior Australians.
We have also delivered the single biggest boost to the pension in more than a century, changed the indexation system so it better reflects pensioners’ cost of living and delivered a brand new pension increase under the Household Assistance Package.
Since our reforms in September 2009, the maximum rate of the pension has increased by $207 a fortnight for singles and $236 a fortnight for couples combined.
This change to the Pension Bonus Scheme is estimated to save $80.5 million over three years.