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Will pensioners benefit from the government's plan for employment?

By Harry O'SullivanMarket OverviewSep 26, 2023 16:05
Will pensioners benefit from the government's plan for employment?
By Harry O'Sullivan   |  Sep 26, 2023 16:05
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The paper outlined the government's intention to make permanent upfront $4,000 work bonus credit new pensioners, and lift the maximum balance to $11,800.

Key points
  • Treasurer Jim Chalmers and the government are looking to incentivise more pensioners to work.
  • The 'Working Future' white paper outlined the government's strategy for the labour market in the coming years.
  • The $4,000 credit all pensioners receive in their work bonus account, initially temporary, will be made permanent.
  • National Seniors Australia said the government still needs to do more to help pensioners in the workforce.

The balance in the work bonus account offsets income pensioners make from working that would otherwise have lowered the amount they receive from their pension.

Pensioners can earn up to $300 a fortnight from work without having their pension payments cut, and any part of this amount they don't use can be deposited into the work bonus account.

The white paper also emphasised the various measures that will help meet upcoming demand for staff in the aged care sector, including increased wages and improved care delivery models.

Ian Henschke, Chief Advocate for National Seniors Australia, welcomed the paper, saying it is a "forerunner to real reform", but continued to call for the implementation of the other recommendations NSA made in its submissions.

"[The Working Future Paper] shows the government are willing to listen, but it must go further," Mr Henschke said.

"The government could reduce the barriers to workforce participation by trialling a targeted reduction in the income test taper rate for workers in the health and social assistance sector."

Currently, pension payments are reduced 50 cents for every $1 a pensioners income exceeds minimum thresholds, not including the $300 fortnightly work bonus.

Mr Henschke and National Seniors Australia called for this to change to 32.5 cents to boost workforce participation by older Aussies.

"[Workforce] shortages are not going to be solved by immigration alone," Mr Henschke said.

"We also need to boost tax revenue to pay for health, aged care and other social services."

A Deloitte report called "The Grey Army Advances" found increasing the participation rate among Aussies older than 55 by 5% could add $48 billion to Australia's GDP, or an extra $11 billion a year in revenue for the Commonwealth.

More pensioners working in the care sector improves both the pool of staff available and the amount the government can spend on it, which Mr Henschke says is imperative considering the National Skills Commission anticipates a 211,000 shortfall for care and support workers by 2050.

"Older people are dealing with these desperate shortages now. By 2050, it will be their children," he said.

"[Older Australians] deserve to know someone is going to be there for them, at a time when they need it the most."

Calls to let pensioners work

A 2022 survey from the National Seniors found 36% of pensioners had already re-entered paid work after retiring or were considering doing so.

Money was the motivation for 60% of these people, and the organisation says it hears regularly from pensioners who need to keep working to supplement their pension income.

A 2021 paper titled Housing wealth, mortgages and Australians' labour force participation in later life found a correlation between high levels of outstanding mortgage debt and more people working later in life.

Aged care reform

The white paper highlighted Australia's aging population as one of the forces set to reshape the economy in the coming years.

By 2062/63, life expectancies are projected to be 87 years for men and 89.5 years for women, while families are having children later in life, and having less of them.

The paper outlined several steps the government is taking to ensure employment in the care and support sector doubles in the next four decades to meet demand.

More than $11 billion was allocated to fund the Fair Work Commission's interim increase of 15% to award wages for aged care workers in the most recent federal budget.

The paper also discussed the high prevalence of casual workers and multiple job holders in the sector, which can impact the quality of care.

It said the government needs to ensure there are low barriers for workers to transition between different areas in care and support, from the NDIS to residential aged care, for example, to improve job security.

Finally, the government is introducing a new model for how aged care is funded, which could help drive competition among providers.

"Will pensioners benefit from the government's plan for employment?" was originally published on and was republished with permission.

Will pensioners benefit from the government's plan for employment?

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Will pensioners benefit from the government's plan for employment?

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