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More and more of us are working past retirement age. The latest Census shows the number of older people in the labour force has actually doubled from six to 13 per cent over the last decade and a half. Here is a guide to how you can choose and structure your part-time work while still enjoying your age pension entitlements.

Amy Chien-Yu Wang
Published on
Wednesday, November 1, 2017 - 17:38
6 min 27 sec

You’re entitled to access the age pension in Australia if you’re over 65.5 years old. The age pension rules don’t limit pensioners from working as long as they meet the income and assets means test. That means you could even be working full-time and be on the age pension. Co-founder of the SuperGuide website Trish Power explains.

“First of all, your home is not counted as part of any of the tests so that’s exempt from the age pension test. If you own in addition to your home, up to $253,000 assets, you can still receive full age pension subject to meeting income test. So if you have more than that, then your pension will be reduced over time.”

The age pension rules don’t limit pensioners from working as long as they meet the income and assets means test.

She’s referring to single homeowners. For couples who own a home, the combined assets threshold is $380,500. Under the income test, a single person can earn up to $168, and a couple, $300 a fortnight, and still get full age pension. Once the earning exceeds the limits, the drops by 50 cents for each extra dollar of income. Meanwhile, retirees working part-time can also take advantage of an incentive called the “work bonus”, which can nearly double the capacity for a single or couple to earn income.

“So, the first $250 of any employment income in a fortnight doesn't count towards the income test. So, if someone earns $500 a fortnight only $250 of that would count towards the income test, which is quite an incentive for older Australians to work part time.”

If you go over those thresholds, then your pension does graduate down with 50 cents reduced from every dollar over the income threshold. But Trish Power says there is still a lot of scope for people to work as well as receiving the age pension.

“For example, a single person could earn more than $50,000 a year, it’s measured over a fortnight, roughly, and still get a part age pension or a couple can earn just over $75,000 a year, and still get a part age pension subject to meeting both tests.”

The form of employment can be casual, running a business, self-employment, or part-time work, provided the individual discloses those earnings to Centrelink and meet the means test.

“If it’s under the thresholds it won’t hurt their full age pension. If it’s over, it will reduce it a bit. But for many people, they’d prefer to earn that extra income because the total income is often greater, even if it means they’ll have a small reduction of their age pension.”

You can still accumulate superannuation contributions from employers whilst making money on the side. The longer you work the better for your finances.

But according to the head of research at the Association of Super Funds of Australia, Ross Clare, that doesn’t necessarily apply to gig economy jobs like Uber or Deliveroo.

“They really put the person doing the work in a position of being a contractor and the work involves a whole range of individual small jobs. For someone to get superannuation, they have to be in situation where for one job they’re getting $450 or more a month in earnings; and many of these gig economy jobs - that doesn't happen or it doesn't meet the tests for employment.”  

Ross Clare says policy gaps mean some of these gig economy jobs may look like ongoing regular work when they don’t really have the entitlements of normal casual or part time jobs.

“Certainly, the gig economy jobs like Airtasker or Sidekicker or the ones which are facilitating more professional sort of jobs - they can be bigger exercises with employers, who will be paying more than $450 a month and often they will attract superannuation.”

On the other hand, there’re also older migrant workers, who have no choice but to work in exploitative conditions with low pay and long hours due to poor English language skills and a lack of local qualifications. Bich Thuy Pham, a Vietnamese community worker from Sydney-based Asian Women at Work explains.

“They get paid by cash some of them they come here by contributing visa, parent visa, so they’re not allowed to get pension. So, they need waiting till 10 years.”  

You can still accumulate superannuation contributions from employers whilst making money on the side. The longer you work the better for your finances.

The older women Bich Thuy Pham supports are farmworkers and kitchen hands, who are sometimes paid as little as $12 an hour. Getting superannuation contribution is often out of the question.

“If they ask the right pay and get super, the boss says ‘stay home, no work for you.’”

For those working without pension or superannuation entitlements, Trish Power advises saving as much as possible before meeting the age pension requirements.

“Even building up savings along the way will certainly help. Every little bit helps. It’s amazing what $10,000 savings can do when you’re in retirement, because that can mean the difference just even earning a bit of money on that, because that can be the difference between having private health cover or running a car.” 

If you or someone you know face exploitation at work, you can call The Fair Work Ombudsman for advice or support on 13 13 94 between 8am to 5:30pm Monday to Friday. You can access the translating and interpreting service by dialling 131 450. If you'd like to find out more about your age pension eligibility and entitlements, visit the Department of Human Service website.