Can you do a bit of paid work while on the Age Pension without it getting smashed? Yes, and more than most people realise. A scheme called the Work Bonus lets you earn $300 a fortnight from work before the income test even looks at it, and unused amounts build up in a bank of up to $11,800. As Phil put it on the latest Wealthlab Podcast episode, “it’s a super cool thing that heaps of people haven’t heard about.” This article covers how the income test treats employment income, how the Work Bonus bank accrues, and three worked examples from the episode showing exactly what happens to the pension.
The income test in 30 seconds
When you apply for the Age Pension, Services Australia runs two tests, an assets test and an income test, and applies whichever gives the lower pension. Most of the pre-retirees and retirees we see are assets tested, though Phil noted on the podcast that after recent deeming rate increases, more people are starting to fall under the income test.
Under the income test, a single person can have $226 a fortnight of income from all sources before the pension starts reducing. For a couple it is $396 a fortnight combined. Beyond that, the pension reduces by 50 cents for every dollar over (combined for couples).
“All sources” includes rental income, deemed income on financial investments and super, and employment income. Figures current as at the 1 July 2026 indexation (Services Australia). These thresholds are set by the Australian Government and are reviewed periodically.
What the Work Bonus does
The Work Bonus exists to encourage people on the Age Pension to keep working if they want to. It ignores the first $300 a fortnight of income earned from work before the income test is applied (Services Australia).
Stack that on top of the income free area and the numbers get meaningful. A single person could have up to $526 a fortnight ($226 free area plus $300 Work Bonus) before any pension reduction. A couple where one person works could have up to $696 combined, and if both work, up to $996 a fortnight.
There is no application. Centrelink applies it automatically to eligible employment income when you report your income each fortnight.
The Work Bonus bank
This is the part almost nobody knows about. If you do not work in a fortnight, the $300 is not lost. It accrues in a Work Bonus bank. You start with a $4,000 credit when you first claim the pension, and the bank builds by $300 every fortnight you do not use it, up to a maximum of $11,800.
That structure makes the scheme especially good for lumpy work. Phil sees this pattern often in practice: “I’ve got a lot of clients, they might come from a certain professional background. They’ll come and do a consulting stint, work for a month or two on a project. They could have built a reasonable balance at that point, and quite a lot of that income then won’t count against the Age Pension.” The same applies to seasonal work, election polling booths, exam marking or vintage season at a vineyard.
Three worked examples from the podcast
Margaret. Single, 70, on the full Age Pension of $1,200.90 a fortnight (maximum single rate, current as at 20 March 2026 indexation, Services Australia). She picks up two shifts and earns $460 a fortnight. The Work Bonus removes $300, leaving $160 of assessable income. That is under her $226 income free area, so her pension is completely unaffected. She has gone from $1,200.90 in pension to around $1,660 in total fortnightly income.
Please note: All figures, projections and scenarios in this article are approximate and for illustrative purposes only. Individual outcomes will vary based on personal circumstances, investment returns, fees, and current government policy. This is general information, not personal advice.
Bob. Part of a couple, earning $700 a fortnight from driving work. The Work Bonus takes $300 off, leaving $400 assessable. The couple free area is $396, so he is $4 over. At 50 cents in the dollar, the pension reduces by $2 that fortnight. He has been paid $700 and given up $2 of pension.
Fred. Doing handyman work for the first time in retirement, earning $900 in a fortnight. That fortnight’s $300 Work Bonus drops his assessable income to $600. Because he has not worked before, his Work Bonus bank holds at least $4,000, so the bank absorbs the remaining $600. Assessable income: nil. Pension: untouched.
As the guys summed it up on the episode, every dollar earned this way while keeping the full pension is a dollar less that needs to come out of super.
What the Work Bonus does not cover
The scheme only does what it says on the tin. It applies to income from personal exertion, meaning you actively did something for the money. Wages, salary, self-employment involving active work, that sort of thing. It does not apply to rental income, investment income or deemed income on your super and financial assets. Those still count towards the income test in full.
On deeming, one change worth knowing about right now: deeming rates rise on 20 September 2026, with the lower rate moving from 1.25% to 1.75% and the upper rate from 3.25% to 3.75%. The thresholds ($66,800 for singles, $110,600 for couples) stay put (Services Australia, figures current as at September 2026 and subject to periodic review). Higher deeming means more people will feel the income test, which makes the Work Bonus more valuable, not less. Employment income gets the $300 shield. Deemed income does not.
If you want a general sense of how your own super and income fit together, the free Wealthlab super calculator is a quick place to start.
The super wrinkle: two accounts
If you are past pension age and drawing from super, working again creates a small complication. Your employer must pay super on your wages (the SG rate is 12%), and those contributions cannot go into a pension account. So you end up with two accounts: a pension account paying you an income, and an accumulation account receiving the new contributions.
Phil sees this constantly: “Get clients ring me up and say, hey Phil, just went and did some work that I hadn’t told you about, and now I’ve got this money that needs to go somewhere.” There are options, including consolidating it into the pension via a restructure or withdrawing it, depending on the situation. The main thing is not to let a small accumulation balance sit forgotten, getting chewed up by fees.
A practical tip on myGov
Income reporting runs through myGov, and Scott flagged a trap he keeps seeing with clients: when downloading the myGov app, sponsored ads sometimes appear above the real app in the app store. The genuine light blue myGov app may be the second or third result. Many adult children set this up for their parents, since verification is fiddly and it is the only way to report income and see the Work Bonus balance.
FAQ
How much can I earn on the Age Pension before it reduces?
With the Work Bonus, a single pensioner can generally have up to $526 a fortnight of employment income ($226 income free area plus the $300 Work Bonus) before the pension reduces, assuming no other assessable income. Couples can have more, and an accrued Work Bonus bank can lift the effective amount much higher.
Do I need to apply for the Work Bonus?
No. Centrelink applies it automatically to eligible employment income. You just need to report your income each fortnight through myGov.
What is the Work Bonus bank?
Unused Work Bonus accrues at $300 a fortnight into a balance you can draw on later, up to a maximum of $11,800. New pension claimants start with a $4,000 credit. It suits people doing seasonal or occasional work, because a big fortnight of earnings can be offset by the accrued balance.
Does the Work Bonus apply to rental or investment income?
No. It only applies to income from personal exertion, such as wages or active self-employment. Rental income, investment income and deemed income on financial assets still count in full under the income test.
Does working on the Age Pension affect my super?
Your employer must pay super contributions on your wages, and these go into an accumulation account, separate from any pension account you draw from. Depending on your circumstances, that balance can later be consolidated or withdrawn. It is worth keeping track of so it is not eroded by fees.
Will the September 2026 deeming changes affect me?
From 20 September 2026, deeming rates increase to 1.75% and 3.75%. If you are income tested, your deemed income will rise, which may reduce a part pension. Employment income covered by the Work Bonus is not affected by deeming.
Thinking about working in retirement?
Plenty of the people we speak with assume a few shifts will just cost them pension. The numbers above suggest it is usually a better deal than expected, though how the income test, deeming and the Work Bonus interact depends entirely on individual circumstances. If any of this has raised questions about your own retirement, have a chat with us. No pressure, no jargon. Book a free call or read more about our pension and Centrelink advice and retirement planning services. Phil and Dan also walked through real Age Pension case studies in our episode on how the Age Pension really works, including how selling an investment property at the wrong time cost a client $25K more in CGT.
You can watch the full Work Bonus episode here:
