The threshold before your pension starts reducing is meaningfully higher than most people expect. For a single pensioner, you can earn effectively $518 per fortnight from employment (roughly $13,470 per year) with zero impact on your pension. For couples, the combined thresholds are higher again.
If you want the broader framework on how the retirement system works, our guide to How Retirement Works in Australia covers the three-pillar system that combines super, Age Pension, and personal savings.
How the Age Pension income test works
The income test determines how much Age Pension you receive if you have income from any source: employment, investment returns, superannuation drawdowns, or rental income.
Current income free areas as at 20 March 2026 (from Services Australia):
| Situation | Income free area (per fortnight) | Pension reduction above free area |
|---|---|---|
| Single | $218 | 50 cents per dollar |
| Couple combined | $380 | 50 cents per dollar (combined) |
If your total assessable income is below the free area, you receive the full pension. Above the free area, your pension reduces by 50 cents for every dollar over the threshold. Working part-time does not disqualify you from the pension. It just affects how much you receive, depending on how much you earn.
Employment income is treated much more favourably than most other income sources, because of the Work Bonus.
The Work Bonus: how employment income is treated differently
The Work Bonus is a separate concession that applies only to income from employment or self-employment. It sits on top of the standard income free area.
How it works:
The first $300 per fortnight of employment income per person is excluded from the income test entirely. This means a working single pensioner can earn effectively $518 per fortnight ($300 Work Bonus plus $218 free area) before their pension starts reducing.
The Work Bonus accumulation bank:
If you are not working, or you are earning less than $300 per fortnight from employment, the unused Work Bonus accumulates in an income bank. This bank can build up to a maximum of $11,800. When you take on paid work, the banked amount is drawn down first before the income test kicks in.
This makes the Work Bonus particularly valuable for people who work seasonally, take on short-term contracts, or return to casual work for a period. A pensioner who has built up the full $11,800 bank can earn that amount in employment income without any pension reduction at all, regardless of when the work occurs.
Current as at July 2026. Confirm current Work Bonus figures at Services Australia: Work Bonus.
Current Age Pension rates (from 20 March 2026)
From 20 March 2026 (Services Australia):
| Rate | Fortnightly | Annual (approx.) |
|---|---|---|
| Single | $1,200.90 | $31,223 |
| Couple (each) | $905.20 | $23,535 per person |
| Couple (combined) | $1,810.40 | $47,070 combined |
Rates are indexed each March and September. Next indexation is due September 2026.
What combining work and the pension actually looks like
The table below shows how a single pensioner’s fortnightly payment is affected at different levels of part-time employment income, after the Work Bonus is applied.
| Fortnightly employment income | Work Bonus applied | Assessable income | Pension reduction | Pension remaining |
|---|---|---|---|---|
| $200 | $200 exempt | $0 | $0 | Full $1,200.90 |
| $400 | $300 exempt | $100 (under free area) | $0 | Full $1,200.90 |
| $518 | $300 exempt | $218 (exactly at free area) | $0 | Full $1,200.90 |
| $700 | $300 exempt | $400 (over free area by $182) | $91 | $1,109.90 |
| $1,000 | $300 exempt | $700 (over free area by $482) | $241 | $959.90 |
| $1,500 | $300 exempt | $1,200 (over free area by $982) | $491 | $709.90 |
The key threshold to remember: for a single pensioner, employment income up to $518 per fortnight has no effect on the pension. Above that, the pension reduces at 50 cents per dollar. Even at $1,500 per fortnight in employment income (around $39,000 per year), the pensioner still receives approximately $709.90 per fortnight. The pension does not stop abruptly.
Three real-life scenarios
Scenario 1: Jenny, single, working casual retail shifts
Jenny is 68 and earns $450 per fortnight from casual retail work. The Work Bonus exempts the first $300, leaving $150 as assessable income. That is below the $218 free area, so there is no pension reduction. Jenny receives her full pension of $1,200.90 per fortnight plus $450 in wages, for a total fortnightly income of $1,650.90.
Scenario 2: David and Sue, both working part-time
David and Sue are both 70. David earns $300 per fortnight and Sue earns $200 per fortnight. David’s $300 is fully exempt under the Work Bonus. Sue’s $200 is fully exempt under her own Work Bonus (each partner has their own Work Bonus). Their total assessable employment income is $0. Their combined Age Pension of $1,810.40 per fortnight continues unchanged, plus $500 in combined wages.
Scenario 3: Margaret, taking a short-term contract
Margaret is 69 and has not worked since retiring. Her Work Bonus bank has accumulated to the maximum of $11,800. She accepts a two-month seasonal contract paying $2,000 per fortnight. Her banked Work Bonus of $11,800 is drawn down against the employment income across the contract period. Most of her income is sheltered from the income test, and her pension reduces only modestly or not at all depending on the timing.
This is exactly what the Work Bonus bank is designed for. It allows pensioners to take on occasional work without an immediate and sharp pension reduction.
What you must report to Centrelink
Receiving the Age Pension while working comes with a reporting obligation. Employment income must be reported to Centrelink, even if the Work Bonus means it has no impact on the payment.
You can report through:
- Your myGov account linked to Centrelink
- The Centrelink Express Plus app
- Phone on 132 300
- In person at a Services Australia service centre
Report every fortnight if your income varies. If your income changes, update Centrelink promptly. Failure to report accurately can result in overpayments that must be repaid.
Phil and Dan covered commonly missed Age Pension opportunities, including how to structure work income against pension thresholds, in Episode 20 of the Wealthlab Podcast:
If you are close to Age Pension age and thinking about how work income will interact with your entitlement, that episode walks through real client scenarios and structural strategies.
What happens to your super when you work after 67?
If you work part-time after age 67 and your employer pays the Superannuation Guarantee (12% from 1 July 2025) on your wages, those contributions go into your super accumulation account and continue growing. From age 75, employers are no longer required to make super contributions, though some voluntarily continue.
Working even a small number of hours per week can therefore continue building your super balance and long-term financial security, while your Age Pension continues providing a meaningful income floor.
For couples where one partner is working and one is on the pension, the picture is more complex. Our post on Does My Partner Working Affect My Pension? walks through how the couples income test applies when one partner is under pension age and still earning.
For more on how super works after pension age, see our superannuation page. The pension and Centrelink page covers the full income and assets test rules.
Your Pensioner Concession Card while working
Most Age Pension recipients automatically receive a Pensioner Concession Card. If you continue working and your pension payment reduces due to employment income, you generally keep the Pensioner Concession Card as long as you are receiving any level of pension payment, even a part pension.
The card provides concession PBS medication prices, discounted public transport in most states, utility rebates, and council rate concessions. Its annual value is typically $2,000 to $5,000 per household, which is one of the reasons keeping any level of pension payment (rather than opting out entirely) tends to be financially worthwhile.
If your income temporarily rises above the pension cut-off and your pension stops, most people can retain the Pensioner Concession Card for up to 12 weeks through the “employment nil rate” provisions. This is a valuable transition provision worth knowing about if you take on a higher-paying temporary role.ber 2026.
How work income affects retirement planning more broadly
For most Australians, working part-time in retirement is more than permitted. It is one of the smartest ways to transition into full retirement. Combining a modest work income with the pension often produces a significantly higher total income than either source alone, while keeping you socially connected and mentally engaged.
The mathematical case is often stronger than people realise. If a single pensioner is drawing $400 per fortnight from their super in addition to the pension, replacing that super drawdown with $400 per fortnight of employment income preserves the super balance while still providing the same total income. Over 5 to 10 years of part-time work, that difference can extend retirement funding by many years.
For more on the emotional and lifestyle side of working through retirement, see our guide to Non-Financial Issues to Consider in Retirement, which covers how purpose, social connection, and structured routine all shape retirement quality.
Frequently asked questions
Can I work and still receive the full Age Pension?
Yes, if your total assessable income remains below the income free area. For a single pensioner, the Work Bonus means you can earn up to $518 per fortnight in employment income ($300 Work Bonus plus $218 free area) before your pension reduces at all. Couples can earn more in combined terms.
How much can I earn before my pension reduces?
A single pensioner can earn up to $518 per fortnight in employment income before any reduction, thanks to the Work Bonus. Above that, the pension reduces at 50 cents per dollar of assessable income. Income free areas and rates are current as at 20 March 2026 from Services Australia.
What is the Work Bonus and how does the bank work?
The Work Bonus exempts the first $300 per fortnight of employment income per person from the income test. If you do not work in a given fortnight, the unused $300 accumulates in a bank that can reach a maximum of $11,800. This banked amount is then drawn down when you do work, sheltering that income from the pension test.
Will working affect my super?
If you are under 75 and your employer is required to pay the Superannuation Guarantee (12% from 1 July 2025), your super continues growing from employer contributions while you work. Working part-time after pension age can therefore simultaneously top up your super while your pension provides a base income.
What happens if I earn too much?
Your pension reduces under the income test at 50 cents per dollar above the assessable income free area. It does not stop abruptly. You may still qualify for a part pension, retain your Pensioner Concession Card, and return to a higher pension rate if your income later decreases. If your income puts you above the pension cut-off entirely, most people can retain the Pensioner Concession Card for up to 12 weeks under the “employment nil rate” provisions.
Do I have to stop working to get the Age Pension?
No. You can continue working part-time, casually or on contracts for as long as you choose. The Work Bonus and income test are specifically designed to allow this.
What do I need to report to Centrelink when working?
You must report all employment income to Centrelink, even if the Work Bonus means it does not reduce your payment. Report fortnightly through myGov, the Centrelink app, phone, or in person. Changes in income should be reported promptly to avoid overpayments.
Can I still get the Age Pension if I run my own business?
Yes. Self-employment income counts as employment income and is eligible for the Work Bonus. If you own a business, the business income (after deductions) is treated similarly to wages for the purposes of the Work Bonus. Speak with a specialist accountant if the business structure is complex.
Does the Work Bonus apply to both partners in a couple?
Yes. Each partner has their own Work Bonus of $300 per fortnight, and each partner has their own Work Bonus bank up to $11,800. If both partners work, both can benefit from the exemption independently.
What is the maximum Age Pension in 2026?
From 20 March 2026, the maximum is $1,200.90 per fortnight for singles (approximately $31,223 per year) and $1,810.40 combined per fortnight for couples (approximately $47,070 per year). Rates are updated each March and September. Check current rates at Services Australia.
If I return to work after retiring, does the pension stop?
Not necessarily. The Work Bonus and income free area allow substantial employment income without any pension reduction. Even if your income exceeds the pension cut-off temporarily, the pension can be reinstated when your income drops. The system is designed to accommodate people moving in and out of the workforce in retirement.
Your next step
Working part-time and receiving the Age Pension is one of the most financially sensible ways to transition into full retirement. The Work Bonus makes part-time employment particularly attractive for pensioners, and combining modest employment income with the pension often produces a significantly higher total income than either source alone.f employment income, and combining a part pension with modest wages often produces a meaningfully higher total income than either alone.
If you want to talk through how your own income, assets, and pension situation fit together, have a chat with the Wealthlab team. No pressure, no jargon. Or if you’d prefer a quick general read on where you stand, or take the free Wealthlab retirement quiz
