Yes, you can work part-time and continue receiving the Age Pension. The government actively encourages it through the Work Bonus, which exempts the first $300 of employment or self-employment income per person per fortnight from the income test entirely. For a single pensioner earning under $300/fortnight ($7,800/year), there is zero reduction in Age Pension payments. Beyond that, the pension reduces gradually by 50 cents per dollar of assessable income above the free area but working part-time does not disqualify you from receiving a pension unless your total combined income from all sources exceeds approximately $2,444.60 per fortnight (March 2026). For most part-time workers, the household is financially better off working than not.
This guide explains exactly how the income test applies to working pensioners, how to use the Work Bonus bank strategically, what the combined tax and pension impact of different income levels looks like, and how continuing to work affects your superannuation.
The Income Test: How Employment Income Affects Your Age Pension
The Age Pension income test assesses all income from all sources: employment, business, rental income, investment earnings, and deemed income from financial assets including superannuation in account-based pension phase. Employment income receives special treatment through the Work Bonus, but all other income is assessed in full.
Income Free Areas and Taper Rate (March 2026)
| Pension Type | Income Free Area (Fortnightly) | Income Free Area (Annual) | Pension Reduction Above Free Area | Income Cut-Off (No Pension) |
|---|---|---|---|---|
| Single | $212/fortnight | ~$5,512/year | 50c per dollar above $212/fortnight | ~$2,444.60/fortnight (~$63,560/year) |
| Couple (combined) | $360/fortnight | ~$9,360/year | 50c per dollar above $360/fortnight combined | ~$3,661.20/fortnight (~$95,191/year) |
Source: Services Australia income test for Age Pension, March 2026. Thresholds are indexed periodically.
The key point: these free areas apply to all assessable income combined not just employment income. If you also have $150/fortnight in deemed income from super or investments, that already uses most of the $212 free area before any employment income is counted. This is why many pensioners who think they’re comfortably within the limits find their pension reduced more than expected the income test is cumulative across all sources.
The Work Bonus: How It Works and Why It Matters
The Work Bonus is a concession that sits on top of the income free area and applies specifically to employment and self-employment income. Here’s the critical distinction: the Work Bonus is separate from and additional to the income free area it’s not a replacement for it.
Work Bonus Rules (March 2026)
- The first $300 of employment or self-employment income per person per fortnight is excluded from the income test it’s as if that income doesn’t exist for pension calculation purposes
- This $300 exemption applies to each individual, not per couple combined so a working couple can each exempt $300/fortnight, for a combined $600/fortnight exemption
- Unused Work Bonus amounts accumulate in a Work Bonus bank, up to a maximum of $11,800 per person
- The Work Bonus bank balance can be used to offset employment income in future fortnights when you earn more than $300
- The Work Bonus applies only to employment and self-employment income it does not apply to investment income, rental income, super drawdowns, or business distributions where you are not actively working
- The Work Bonus bank starts at zero when you first receive the Age Pension and accumulates at $300 per fortnight in fortnights where you earn less than $300
How the Work Bonus Bank Works in Practice
The Work Bonus bank is most valuable for pensioners who work seasonally or take on occasional contracts. Here’s an example:
| Month | Employment Income (Fortnight) | Work Bonus Used | Assessable After Work Bonus | Work Bonus Bank Balance |
|---|---|---|---|---|
| Not working (6 months) | $0 | $0 | $0 | Accumulates: up to $3,900 (13 fortnights × $300) |
| Seasonal contract (4 weeks) | $1,800/fortnight | $300 regular + $1,500 from bank | $0 (fully offset by bank) | Reduces by $1,500/fortnight used |
| Casual shifts (ongoing) | $500/fortnight | $300 regular | $200/fortnight assessable | No accumulation (using full $300 each fortnight) |
A pensioner who hasn’t worked for six months can accumulate up to $3,900 in their Work Bonus bank (13 fortnights × $300). If they then take a 4-week contract at $1,800/fortnight, the bank can absorb much of the income spike potentially maintaining full pension during the contract period. If the bank has reached the maximum of $11,800, a single pensioner could earn up to $12,100 gross in a fortnight (Work Bonus $300 + bank $11,800) with no pension reduction at all from employment income.
The Real Financial Picture: Is Working Part-Time Worth It?
Many pensioners worry that working will simply erode their pension dollar-for-dollar. The reality is more favourable the combined effect of the Work Bonus and the 50-cent taper rate means that working almost always leaves the household better off, even after the pension reduction and income tax.
Full Worked Example: Single Pensioner Earning $800/Fortnight
| Item | Amount (Fortnightly) |
|---|---|
| Employment income (gross) | $800 |
| Less: Work Bonus exemption | −$300 |
| Assessable employment income | $500 |
| Other assessable income (deemed super) | $150 (example) |
| Total assessable income | $650 |
| Less: income free area | −$212 |
| Income above free area | $438 |
| Pension reduction (50c per dollar) | −$219 |
| Full single pension (March 2026) | $1,178.70 |
| Reduced pension | $959.70/fortnight |
| Employment income (net of tax, approx.) | ~$690 |
| Total fortnightly household income | ~$1,650 vs $1,179 without work |
| Net benefit of working | +~$471/fortnight (~$12,246/year) |
Even after the pension reduction and tax on employment income, this pensioner is $471/fortnight better off by working an additional ~$12,246/year in household income. The pension has reduced by $219/fortnight, but they’ve earned $690 net after tax, producing a net gain. This is the “effective wage” from working: it’s lower than the gross wage because of the pension reduction, but it’s still a meaningful positive for almost all income levels up to the pension cut-off.
The Effective Wage Rate: What Working Actually Earns You
For a single Age Pensioner, the effective return from employment (after pension reduction and income tax) at various gross earnings levels looks like this:
| Gross Employment Income (Fortnightly) | Pension Reduction | Net Gain from Working* | Effective Hourly Rate (based on 20hrs/week) |
|---|---|---|---|
| $300 (Work Bonus covers fully) | $0 | ~$270 (net of tax) | ~$13.50/hr |
| $600 | ~$94 | ~$430 | ~$21.50/hr |
| $800 | ~$219 | ~$471 | ~$23.55/hr |
| $1,200 | ~$419 | ~$577 | ~$28.85/hr |
| $1,600 | ~$619 | ~$631 | ~$31.55/hr |
Net gain = gross employment income minus income tax (at low-income rates including LITO/LMITO for pensioners) minus pension reduction. Approximate figures; actual tax depends on total income including pension. Does not include Work Bonus bank usage.
The table shows something important: the effective hourly return from working increases as income rises (because the fixed-rate tax and pension reduction are proportionally less significant at higher earnings). Working 10 hours per week at $30/hour earns about $300/fortnight fully exempt under the Work Bonus, adding $300 gross to household income with zero pension impact. Working 20 hours per week at the same rate adds considerably more to household income even after the pension reduction.
In our experience advising 500+ Australian families, the retirees who worry most about the pension reduction from working almost always end up financially better off working than they expected and the social and psychological benefits of continued employment compound that positive outcome considerably.
Effect on Superannuation: Does Working After 67 Help?
Working after Age Pension age can benefit your superannuation in two ways and both are often overlooked:
Employer SGC Contributions Continue
If you’re employed (not self-employed), your employer must continue paying the Superannuation Guarantee Contribution (12% from 1 July 2025) into your nominated super fund, provided you meet the minimum earnings threshold ($450/month though this has been effectively eliminated for most employees). There is no upper age limit for employer SGC contributions (it was removed from 1 July 2022). A pensioner earning $800/fortnight ($20,800/year) at 12% SGC receives an additional $2,496/year into super continuing to build the balance they’re drawing down, partially offsetting drawdown rate.
Voluntary Contributions After 67
From 1 July 2022, the work test for voluntary super contributions was removed for Australians under 75 making non-concessional (after-tax) contributions. Previously, you needed to work at least 40 hours in 30 consecutive days in the financial year to make voluntary contributions. That requirement is gone a pensioner earning any employment income (or no employment income at all) can now make non-concessional contributions of up to $110,000 per year into super (subject to total super balance conditions) without needing to satisfy a work test.
For concessional (pre-tax/salary sacrifice) contributions, the work test was also removed for those aged 67–74 from the same date though a “work test declaration” is still required for personal concessional contributions claimed as a tax deduction. The ATO’s guidance on contributing to super has the current rules by age.
For a detailed analysis of whether making extra contributions before (or after) you turn 60 makes financial sense, see our guide on whether extra super contributions before 60 are worth it.
Tax on Employment Income While Receiving the Age Pension
An aspect many working pensioners don’t fully plan for is the tax treatment of their employment income. The Age Pension itself is assessable income for tax purposes though the Seniors and Pensioners Tax Offset (SAPTO) means most low-income pensioners pay little or no income tax. But adding employment income on top of the pension can push total income above the tax-free threshold for SAPTO eligibility.
Key tax points for working pensioners:
- The SAPTO: Eligible seniors (age 67+) who receive the Age Pension can access the Seniors and Pensioners Tax Offset, which effectively raises the income tax-free threshold to approximately $32,279 for singles and $28,974 each for couples. If your combined pension and employment income is below this threshold, you pay no income tax
- Above the SAPTO threshold: Employment income above the effective tax-free threshold is taxed at your marginal rate starting at 19% for income between $18,200–$45,000, then 32.5% up to $135,000
- Tax withholding from employment: Your employer will withhold tax from employment income based on a standard withholding schedule. If you’re entitled to SAPTO, you may want to complete a Withholding Declaration with your employer to reduce withholding otherwise you’ll receive a refund at tax time but have less cash during the year. The ATO’s tax withheld calculator can help you estimate the right withholding
- Medicare levy: Age Pensioners receiving the full pension are generally exempt from the Medicare levy. If you’re receiving a part pension and have employment income, the Medicare levy may apply on income above certain thresholds
What to Report to Centrelink When You Work
You must report your employment income to Services Australia every fortnight even if you earn $0 that fortnight. The requirement to report fortnightly continues throughout your working life as a pensioner. Consistent, accurate reporting protects against overpayments that must be repaid.
How to report:
- Online through myGov (linked to Centrelink) the fastest and most convenient method
- Via the Centrelink Express Plus app on your phone
- By phone on 132 300
- In person at a Services Australia service centre
Report your gross employment income before tax for the fortnight you earned it not when you were paid. If your income varies fortnight-to-fortnight (casual or seasonal work), report the actual amount each fortnight rather than an average. Services Australia uses actual fortnight-by-fortnight income to calculate your Work Bonus usage and any pension adjustments. The Services Australia reporting page has full guidance on what to report and when.
Frequently Asked Questions
Yes the Age Pension income test does not prohibit working. The Work Bonus exempts the first $300 of employment income per person per fortnight from the income test, meaning a pensioner earning up to $300/fortnight ($7,800/year) has zero pension reduction. Above that threshold, the pension reduces by 50 cents per dollar of assessable income above the free area ($212/fortnight for singles, $360/fortnight combined for couples). The pension doesn’t cut out entirely until combined assessable income from all sources reaches approximately $2,444.60/fortnight for singles or $3,661.20/fortnight for couples (March 2026 figures). The Services Australia Work Bonus page has the current rules and examples.
For a single pensioner, you can earn up to $300/fortnight in employment income ($7,800/year) with no pension reduction, thanks to the Work Bonus. If you also have no other assessable income, the total effective threshold before pension reduction begins is $512/fortnight ($300 Work Bonus + $212 income free area). For couples, the combined Work Bonus exemption is $600/fortnight ($300 per person) plus the $360 income free area, meaning the couple can earn up to $960/fortnight combined in employment income before the pension reduces at all assuming no other assessable income. If you’ve accumulated a Work Bonus bank of up to $11,800, you can draw on that to offset higher-earning periods without pension impact.
Yes your employer is required to pay the Superannuation Guarantee Contribution (12% from 1 July 2025) on your ordinary time earnings regardless of your age, provided you’re employed (not self-employed) and your earnings meet the threshold. There is no upper age limit for employer SGC contributions since the removal of the 75-year age limit from 1 July 2022. This means continuing to work not only adds employment income but also continues building your super balance partially offsetting any drawdown you’re taking from it simultaneously.
The Work Bonus bank allows unused Work Bonus amounts (fortnights where you earn less than $300 in employment income) to accumulate up to a maximum of $11,800 per person. This bank can be drawn down to offset employment income in future fortnights beyond the regular $300/fortnight exemption. For seasonal workers or those taking short-term contracts, this is especially valuable: a pensioner who hasn’t worked for several months may have accumulated $3,000–$11,800 in their bank, which can be used to absorb an income spike during a contract period potentially maintaining full pension throughout a busy work period. Check your current Work Bonus bank balance through your myGov/Centrelink account.
Almost always yes the household is almost always financially better off working than not. With the Work Bonus and the 50-cent taper rate, every dollar you earn above the exemption only reduces your pension by 50 cents meaning you keep 50 cents of every additional dollar earned, before tax. After income tax at low rates (most working pensioners are below or at the SAPTO effective tax-free threshold), the net gain from working is typically $0.40–$0.60 per dollar of employment income after the pension reduction. At $800/fortnight gross employment income, the net household gain is approximately $471/fortnight compared with not working around $12,246/year additional income. The pension reduction is a cost, not a barrier.
Yes you must report your employment income to Services Australia every fortnight, even in fortnights where you earn $0. Report online through myGov, via the Centrelink Express Plus app, by phone on 132 300, or in person. Report the gross income earned in the fortnight, not when you were paid. Failure to report accurately can result in overpayments that must be repaid in serious cases, deliberate failure to report is treated as fraud. The simplest habit is to report online on the same day each fortnight regardless of whether your income has changed.
Yes. Your employer must continue paying the 12% SGC on your earnings regardless of your age (up to 75, when the rules change). For voluntary contributions, the work test for non-concessional contributions was removed from 1 July 2022 for those under 75 meaning you can make after-tax contributions of up to $110,000/year into super without needing to satisfy any hours requirement. For personal concessional contributions (salary sacrifice or personal deductible), a work test declaration is still required if you are aged 67–74, but this is simply a declaration that you have worked at least 40 hours in 30 consecutive days in the financial year satisfied by almost any part-time worker. The ATO’s guidance on super contributions has the current rules by age.
Working Part-Time in Retirement: The Financial and Personal Case
The evidence is clear: working part-time while receiving the Age Pension is almost always financially worthwhile, and the Work Bonus is specifically designed to make it attractive. Every dollar of employment income up to $300/fortnight is a pure household gain zero pension impact, zero income test consequence. Beyond that, you keep roughly half of every dollar earned (after the pension reduction), and your super continues to grow from employer SGC contributions.
If your partner is also working or considering work, the combined income test rules and the partner Work Bonus work similarly see our guide on what happens if your partner works for the couple-specific analysis. And if you’re approaching 67 and want to understand the full pension picture including how to apply and what your entitlement is likely to be see our guide on how to apply for the Age Pension.
At Wealthlab, we help Australians model exactly what part-time work means for their pension, tax, and super position giving you the numbers to make a confident decision rather than guessing. Book a free consultation today to understand your complete retirement income picture.