you can work and keep your pension, but there's a catch

The Age Pension is the primary source of income for over half of Australia’s retired population.¹

But a persistent myth is costing Australians the chance to earn some money while keeping their pension payments intact.

Many retirees who receive the pension don’t realise they can return to work without impacting their payments — up to a point.

The Work Bonus allows Age Pension recipients to earn up to $300 a fortnight or $11,800 a year ($7,800 plus a one-off $4,000 bonus, per person in a couple if both qualify for the Age Pension) before tax without reducing their payments.  

Their access to entitlements like the Pensioner Concession Card and the Commonwealth Seniors Health Card also doesn’t change.
 

How the Work Bonus works

Age Pension rules can be complex and confusing, but you don’t have to apply for the Work Bonus. All you need to do is declare your income to Centrelink.

For every dollar earned above this Work Bonus threshold, pension payments are reduced by 50 cents.

And it’s important to be aware that effective marginal tax rates for this income can range from 32% to 106.4%.²

You can see your Work Bonus balance in your Centrelink online account through myGov.

If you're also receiving an income from your super, you can either open a new accumulation account for your employer contributions (your income stream keeps running) or fully roll your income stream back into accumulation phase (this closes your income stream and may have tax implications).
 

Returning to work

Incentives like the Work Bonus are encouraging more older Australians to return to work than ever before.

In fact, workforce participation of Australians aged 65 and over has more than doubled since 2001 (from 6% to 15%).³

This number is almost quadrupled for women over the same period (from 3% to 11%).⁴

Retirees return to work for many reasons, which may include cost-of-living pressures, more social interaction, and a sense of purpose.
 

Untapped potential

Although ‘unretiring’ is on the rise, we’re starting from a low base. 

And with a predicted shortfall of over 211,000 full-time workers by 2050 in the health and community services sector alone⁵, the need for retaining older, experienced workers is only increasing.

According to SuperEd research commissioned by HESTA⁶, the Age Pension means test and Australia’s tax system are discouraging many retirees from returning to work. 

Age Pension recipients earning between $25,000 and $75,000 before tax in employment income can pay a marginal effective tax rate of up to 67% or higher, together with their pension payments being reduced.⁷ Modelling by Deloitte commissioned by National Seniors Australia⁸ shows that if employment income was exempt from the means test, there would be no cost to the government if 8.3% more pensioners returned to work.

Plus, a five percentage-point lift in participation among workers aged 55 or over would generate roughly $48 billion in extra gross domestic product (or 2.4% of national income): a meaningful economic contribution, designed to support better outcome for retirees.⁹  

More work needs to be done

HESTA is calling for Work Bonus thresholds to be scrapped, so more of our members can stay in the workforce if they choose while keeping their Age Pension.

This would allow more HESTA members to make the most of the financial, social and health benefits of returning to work (or staying employed) once they reach pension age, without being left out of pocket.

¹Australian Institute of Health and Welfare, Income support for older Australians, 2025.

²SuperEd, Older Australians: Work trends and intent, 2026.

³Australian Institute of Health and Welfare, Older Australians, 2024.

⁴Australian Institute of Health and Welfare, Older Australians, 2024.

⁵ SuperEd, Older Australians: Work trends and intent, 2026.

⁶ SuperEd, Older Australians: Work trends and intent, 2026. 

⁷ Retirement Essentials, Employment and the Age Pension, 2026.

⁸ Deloitte, Let Pensioners Work, 2022.

⁹ SuperEd, Older Australians: Work trends and intent, 2026.