New reforms set to strengthen incentives to work for pensioners in Australia

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The Albanese Labor Government introduced the Social Security and Other Legislation Amendment (Supporting the Transition to Work) Bill 2023 into Parliament on Wednesday.

The Bill aims to provide more choice and flexibility for older Australians and eligible veterans through an enhanced pension Work Bonus. It also smooths the transition to work for income support recipients by doubling the employment income nil rate period and extending access to the nil rate period for recipients who enter full-time work.

Subject to the passage of legislation, it brings to fruition measures announced as part of the Government’s Employment White Paper released last month. 

Federal Minister for Social Services Amanda Rishworth said the Bill would help to remove barriers often faced by those looking to re-enter the workforce, particularly those looking to take up short-term, casual and gig economy work. 

Amanda Rishworth said “No one should be financially disadvantaged by staying in the workforce longer”. Photo: Ben Searcy.

“Many older Australians are choosing to supplement their Age Pension with paid work – and good on them,” Minister Rishworth said.

“We need to make sure that the system is incentivising older Australians to work if they want to. No one should be financially disadvantaged by staying in the workforce longer, or returning to the workforce after some time away.”

From 1 January 2024 – pending the passage of legislation – all pensioners over Age Pension age and eligible Veterans will have a maximum Work Bonus balance limit of $11,800 rather than $7800. 

All new Age Pension recipients, approximately 195,000 each year, will have a starting Work Bonus income bank balance of $4000 rather than $0, giving them added incentive to maintain a connection with the workforce when they first transition to the pension. 

Federal Minister for Veterans’ Affairs Matt Keogh said the opportunity to work more will support the wellbeing of veterans and their families.

“The ability to undertake meaningful work has been shown to benefit the health and wellbeing of veterans following their military service,” Minister Keogh said.

“Veterans bring to the civilian workforce so many great skills they’ve gained in the ADF, this will ensure our community continues to benefit from their wealth of experience.” 

Matt Keogh
Matt Keogh said the community can benefit from veterans’ wealth of experience. Photo: The West Australian.

Alongside the changes to the Work Bonus are amendments to double the existing employment income nil rate period to more support to income support recipients, including people receiving JobSeeker Payment, when they first take up work.

Minister Rishworth said that the Bill, if passed, will allow income support recipients to retain their concession cards and other supplementary benefits for up to 24 weeks, instead of 12 weeks, from 1 July 2024.

“Losing access to concession cards and certain supplements within a couple of months of getting a job can be concern for income support recipients considering opportunities for work, particularly short-term, casual and gig economy work,” Minister Rishworth said.

“The doubling of the employment income nil rate period is about addressing this concern, smoothing the transition from income support to work.”

The changes to the employment income nil rate period are expected to help approximately 138,000 Australians each year, largely in receipt of JobSeeker Payment and Youth Allowance (other).

More information about the Social Security and Other Legislation Amendment (Supporting the Transition to Work) Bill 2023 can be found on the Department of Social Services website.

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