The Age Pension income test punishes older Australians who need work.
What we are calling for
We recommend employment income be exempt from the income test for pensioners with limited savings or assets.
Increases income and savings of pensioners, social and emotional benefits from workforce engagement and no regular reporting of employment income.
A single pensioner who earns $75,000 in addition to their $25,000 pension would have a taxable income of $100,000 and pay $25,000 in tax. They would have paid for their pension by working and would have $7,500 in additional superannuation to fund their retirement!
Heather is 68. She works casually as a registered nurse with home care provider My Care Solution. She'd be happy to work additional hours. Her employer would welcome her increased availability. Heather wants to work more hours to boost her income. But she finds the 50c in the dollar punitive and the Centrelink reporting burdensome.
Heather would be willing to increase her availability if she knew she wasn't going to be penalised. This would also help her grow her relatively low superannuation balance.
- increases both income and savings of low-wealth pensioners, particularly women
- provides social and emotional benefits from ongoing workforce engagement
- removes any need for regular reporting of employment income via Centrelink.
For the economy:
- by encouraging ongoing workforce participation this will addresses workforce shortages
- additional worker availability will reduce inflationary pressures
- pensioners earning additional income would pay additional income tax, offsetting additional pension costs.
In New Zealand, pensioners are not penalised for earning additional income.
If Australia had a participation rate of over 65s similar to New Zealand’s 24.8%, it would result in an additional 450,000 available workers.
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