How Much Can a Pensioner Earn Before It Affects the Pension?

How Much Can a Pensioner Earn Before It Affects the Pension

Ever wondered how much a pensioner can earn before it affects the pension? Well, the way it works is that Centrelink applies some upper and lower thresholds which determine the amount of Age Pension payments you are eligible to receive. But, there are some little-known ways that allow you to earn more than these thresholds and still get the full pension.

Let’s dive in.

How Much Can a Pensioner Earn Before it Affects the Pension?

A single pensioner can earn $204 per fortnight before it affects the pension and a pensioner couple can earn up to $360 per fortnight, combined, before it affects the pension. However, the Work Bonus allows you to earn up to and additional $300 from work-related earnings before Centrelink pension payments are affected.

This assumes that you are assessed under the Centrelink Income Test.

Centrelink has both an Income Test and an Assets Test. They apply both tests and whichever test results in you receiving the lowest level of Age Pension payments is the test that will be applied to your situation.

Therefore, while you may be eligible for the full Age Pension under the Income Test, if you are only eligible for a part-pension under the Assets Test, then you will only receive a part-pension.

How Much Can My Wife/Husband Earn Before it Affects My Pension?

You and your husband or wife can only earn up to $360 per fortnight, combined, before it affects your pension. Age Pension assessment is made on a combined basis, not an individual basis. Therefore, your combined income is what they use to determine your Age Pension entitlements.

However, the Centrelink Work Bonus allows your spouse to earn up to an additional $300 in work-related earnings before Centrelink pension payments are affected.

What is the Work Bonus?

The Work Bonus is designed to allow pensioners to engage in work without the work-related income affecting your pension.

Specifically, you can earn up to $300 per fortnight without this amount being assessed for Centrelink Age Pension purposes. Furthermore, any portion of the $300 per fortnight that is not used accumulates into a Work Bonus Income Bank that can be used by you in the future. The maximum amount that your Work Bonus Bank can accumulate is $11,800, but there is no expiry date on when this must be used by.

Your Work Bonus balance begins accumulating from the day you become eligible for Age Pension payments, even if you are not working.

The Work Bonus thresholds and Work Bonus Bank is assessed on an individual basis. Your fortnightly threshold or balance is unable to be shared with your wife, husband or partner.

How Much Can I Earn Before I Lose the Pension?

You can earn up to $2,332 per fortnight before you lose the pension as a single person, or up to $3,568 per fortnight as a couple, combined, before you lose the Age Pension, entirely. If you are working, an additional $300 per fortnight, per person, on top of these amounts can be earned before you lose the pension.

In addition to this, if you have a Work Bonus Income Bank balance, you may be able to earn even more without losing the pension altogether.

Can Pensioners Work and Still Get the Pension?

Yes, pensioners can work and still get the pension. In addition to the general Income Test thresholds, the Work Bonus allows each individual to earn up to $300 per fortnight without this amount affecting Age Pension entitlements.

A single person can earn up to $204 per fortnight, plus $300 per fortnight in work-related income, and still get the full Age Pension. Any amounts accumulated in the Work Bonus Income Bank can be added on top of this.

A single person can earn up to $2,332 per fortnight, plus $300 per fortnight in work-related income (and any Work Bonus balance amount), and still be eligible for part-Age Pension payments.

A couple can earn up to $360 per fortnight, combined, plus $300 each, per fortnight in work-related income, and still get the full Age Pension. Any amounts accumulated in the Work Bonus Income Bank can be added on top of this.

A couple can earn up to $3,568 per fortnight, combined, plus $300 each, per fortnight in work-related income (and any Work Bonus balance amount), and still be eligible for part-Age Pension payments.

What are the Centrelink Rules for Pensioners?

The Centrelink rules for pensioners require you to have attained Age Pension age, be under the income and assets test and be classified as an Australian resident.

Detailed below is an explanation of each of these Centrelink rules.

Age Pension Age

The Age Pension age is 66 ½ years if you were born between 1 July 1955 and 31 December 1956. If you were born on or after 1 January 1957, your Age Pension age is 67.

In order to be eligible for Age Pension payments, you need to have reached your Age Pension age.

Income and Assets Test for Age Pension

To determine your eligibility for the Age Pension, Centrelink apply an Assets Test and an Income Test. The test that results in you receiving the lowest level of Age Pension payments is the test that Centrelink applies to your situation. The applicable test can change at any given time based on your situation at that time.

Each test has a lower and upper threshold. If you are below the lower thresholds, you are eligible for the full Age Pension. If you are between the lower threshold and the upper threshold, your Age Pension payments reduce at a linear rate. If you exceed either the Assets Test or Income Test, you will not be eligible for Age Pension payments until you fall below the upper threshold of both the Income Test and Assets Test, if ever.

Income Test Thresholds

The Income Test thresholds are as follows:

Lower Threshold

Your Age Pension payments reduce by 50 cents for every dollar that your assessable income exceeds the lower thresholds, as shown in the table below.

Income Per Fortnight
Single$2,332
Couple living together$3,568 combined
Couple living apart due to ill health$4,616 combined

Upper Threshold

You will not receive any Age Pension payments if your income exceeds the upper thresholds, noted below.

Income Per Fortnight
Single$204
Couple (combined) living together or apart due to ill health$360

Assets Test Thresholds

The Assets Test thresholds are as follows:

Lower Thresholds

Your Age Pension payments reduce by $3 for every dollar that your assessable assets exceed the lower thresholds, as shown in the table below.

HomeownerNon-Homeowner
Single$301,750$543,750
A couple, combined$451,500$693,500
A couple, separated by illness$451,500$693,500
A couple, one partner eligible, combined$451,500$693,500

Upper Thresholds

You will not receive any Age Pension payments if your assets exceed the upper thresholds, noted below.

HomeownerNon-Homeowner
Single$656,500$898,500
A couple, combined$986,500$1,228,500
A couple, separated by illness$1,161,000$1,403,000
A couple, one partner eligible, combined$986,500$1,228,500

Our financial planning firm, Toro Wealth, specialises solely in helping 50 to 70 year-olds optimise their financial position in the lead up to retirement. If you’re interested in learning more about our service and cost, click here.

Australian Resident for Age Pension Purposes

To be eligible for Age Pension payments, you need to have been an Australian resident for at least 10 years in total and 5 of those years need to have been consecutive years.

Alternatively, if you are a refugee or former-refugee, you are exempt from the 10 year rule.

You may also satisfy the Age Pension residency requirements if you are a woman whose partner has died and you have been an Australian resident for at least 2 years and both of you were Australian residents at the time of your partner’s death.

How to Increase Age Pension Payments

Watch this video for a strategy on how to maximise Age Pension payments if you have a younger spouse who is under Age Pension age.

Articles You Might Also Like:

References

  • Income test for pensions – Age Pension – Services Australia 2023, Servicesaustralia.gov.au, viewed 3 April 2023, <https://www.servicesaustralia.gov.au/income-test-for-pensions?>.Work Bonus – Services Australia 2023, Servicesaustralia.gov.au, viewed 3 April 2023, <https://www.servicesaustralia.gov.au/work-bonus>.
  • Age Pension – Services Australia 2021, Servicesaustralia.gov.au, viewed 4 April 2023, <https://www.servicesaustralia.gov.au/age-pension>.

Hi, I hope you enjoyed reading this article.

If you want my team and I to help with your retirement planning, click here.

Thanks for stopping by - Chris