Key points
- The federal election is due before June this year and workforce participation remains a key issue.
National Seniors needs your support to convince government to let pensioners work without financial penalties and boost the economy and workforce.
Age pension income test rules should be amended for all workers.
You may have noticed that the news media has ramped up its speculation about when the election will be called. That's a sure sign the Federal Government is moving quickly to take us to the polls.
On your behalf, we're telling the government it has got the rules wrong for working on the pension, and that all parties should listen to what older Australians want.
We have seen some movement, with the government announcing the one-off $4,000 credit in 2022 and a commitment from the Opposition to double the Work Bonus if elected (see this story ).
But neither of these is good enough.
We need a full exemption of work income from the Age Pension income test. This is the simplest and fairest way to support pensioners who need or want to work. It would be cost-neutral if 8.3% of pensioners work or work more - based on modelling from Deloitte .
There are workforce shortages, and employment numbers remain tight, leaving employers scrambling for experienced workers.
Meanwhile, pensioners continue to struggle with cost-of-living increases and social connectedness. It's a needless waste consigning older people, who want to work, onto the jobs scrapheap and then penalise those who want to work for earning above a punitive limit.
Currently, people receiving the Age Pension lose their pension if they take on too much paid work. This discourages them from working past pension age, reducing the ability of employers to retain mature and skilled workers at a time of high labour force demand.
What's wrong with the current government policy?
In key sectors of healthcare and social assistance, job vacancies remain stubbornly high (60,900 or 18% of total vacancies).
Current pension rules discourage older people from remaining in the workforce.
Only 3.3% of people on the Age Pension declare earnings from employment.
Age Pension recipients lose 50 cents in the dollar from their pension if they work more than the rules allow. This discourages some people from working past pension age, undermining the retention of mature and skilled workers at a time of high labour force demand.
Age Pension rules are complex and confusing and cause many to not work or to work in the black economy to avoid impacting their pension.
It's estimated a 5% increase in over-55 worker participation will result in a $47.9 billion increase to GDP.
Allowing women to retain their pension, even when they work, will help to address the gaps in retirement savings and income, boosting financial wellbeing in retirement.
The Federal Government announced a permanent increase in the Work Bonus of $4,000 from 1 January 2024, but it is a one-off bonus suited to periodic workers and not ideal for people who work regularly past pension age.
National Seniors Australia (NSA) wants all political parties and independents to commit to exempting employment income from the Age Pension income test to simplify the pension system and encourage more older people to remain in or rejoin the workforce.
Current means testing policies are discouraging people from working - only 14.2% of Australians aged 65 or over work compared with 24.8% in New Zealand.
There are many benefits:
Employers and the economy benefit from greater workforce participation and revenue.
The public, especially seniors, receives better services and care.
Low wealth pensioners:
Have more disposable income
Have improved health and wellbeing through ongoing workforce engagement
Won't need to report earnings regularly to Centrelink.
The government has been reluctant to implement this sensible policy because of fears about the impact on the Federal Budget. But these fears a largely unfounded.
While an exemption will see some working pensioners receive a boost to their income without having to work more hours, these are likely people who have limited savings. Why? Because the Age Pension means test includes both an income and assets test.
Under this approach, the government works out the amount of pension you receive by applying both tests. People with more assets come under the assets test, which means that our policy benefits those with limited wealth who need to work to achieve a higher standard of living.
While we want employment income to be exempt for all pensioners regardless of what industry they work in, the government could consider phasing the policy in by targeting sectors that need mature workers - for example, aged care and agriculture.
The health care and social assistance sector, which includes aged and disability care, is losing workers to retirement and struggling to recruit replacements.
It is predicted that workforce shortages will increase over time, with a shortage of 100,000 (full-time equivalent) care workers predicted by 2027-28 and a shortage of 212,000 workers predicted by 2049-50.
Age Pension recipients could receive an exemption from the income test for any work undertaken in aged care, disability care, childcare, and other key sectors like agriculture as a first step toward a universal exemption.
