Can you work and still receive the Age Pension?
If you've reached Age Pension age and are thinking about picking up some part-time work, you might be wondering whether earning an income will cost you your pension. The good news is that yes, you can work and still receive the Age Pension — and the Australian Government has actually put measures in place to make it more attractive for older Australians to do exactly that.
Here's what you need to know.
The Short Answer
You can absolutely work while receiving the Age Pension. There is no limit on the number of hours you can work. What matters is how much you earn, as your employment income is assessed under Centrelink's income test and may reduce your pension payments if it exceeds certain thresholds. The key tool designed to help you here is the Work Bonus.
What Is the Work Bonus?
The Work Bonus is a government incentive that reduces the amount of your employment income counted towards the Age Pension income test. In practical terms, the first $300 per fortnight of income you earn from work is not included in your income test at all — meaning it won't reduce your pension payments.
But it gets better. Any unused portion of your fortnightly $300 Work Bonus doesn't simply disappear — it accumulates in what's known as a Work Bonus income bank, up to a maximum balance of $11,800. This means that if you're working irregularly — say, picking up seasonal work or a short-term contract — you can draw on your accumulated balance to offset higher earnings in busier periods without losing any of your pension.
New Age Pension recipients also receive a one-off starting credit of $4,000 added to their Work Bonus income bank from the date their pension commences, giving you a head start from day one.
How Much Can You Earn Before Your Pension Is Affected?
From 1 July 2025, the income free area — the amount you can earn before your pension begins to reduce — is $218 per fortnight for singles and $380 per fortnight combined for couples.
When you combine this with the Work Bonus, a single pensioner can effectively earn up to $518 per fortnight from employment before their pension starts to reduce. For couples where both partners are eligible for the Work Bonus, the combined buffer is even greater.
Beyond that threshold, your Age Pension reduces by 50 cents for every dollar of assessable income above the free area.
What Income Does the Work Bonus Apply To?
It's important to understand that the Work Bonus only applies to employment and self-employment income — that is, income earned through your own effort and personal exertion. This includes:
Wages and salary
Director's fees
Paid leave while still employed
Self-employment income (where you are actively working in the business)
It does not apply to investment income, rental income, deemed income from financial assets, or superannuation income streams. If these are your primary sources of income, the Work Bonus won't provide any benefit.
What About Self-Employment?
If you run your own business, you may still be eligible for the Work Bonus — but only on the portion of income that comes from your active participation in the business. Centrelink refers to this as income earned through "personal exertion." This means you'll need to let Centrelink know what percentage of your business income is attributable to your own efforts, as opposed to the passive returns of the business itself.
It's worth noting that some self-employed pensioners miss out on the Work Bonus simply because this assessment hasn't been set up correctly on their Centrelink record. If you're self-employed and receiving the Age Pension, it's worth checking with Centrelink to make sure the Work Bonus is being correctly applied.
Do You Need to Apply for the Work Bonus?
No. Centrelink applies the Work Bonus automatically — you don't need to do anything to activate it. The most important obligation on your part is to declare your employment income to Centrelink accurately and on time. You can do this through your Centrelink online account via myGov, and you can also check your current Work Bonus balance there.
What Are the Benefits of Continuing to Work?
Aside from the additional income, there are a number of compelling reasons to consider working in retirement:
Financial buffer: Supplementing your pension with employment income can meaningfully improve your quality of life and provide a cushion for unexpected expenses.
Flexibility: Part-time or casual work allows you to stay engaged without the demands of full-time employment.
Social connection and purpose: Many people find that staying in the workforce — even in a reduced capacity — contributes positively to their mental health and overall wellbeing.
Maximising your Work Bonus bank: If you're not working, your Work Bonus still accrues up to the $11,800 cap, meaning you could return to work later and immediately benefit from a significant income buffer.
A Practical Example
Let's say Margaret is a single homeowner receiving the full Age Pension. She decides to take on part-time work earning $600 per fortnight. Here's how her income would be assessed:
$300 is disregarded under the fortnightly Work Bonus
$218 is covered by the income free area
Only $82 per fortnight would be assessed as income under the income test
Her pension would reduce by $41 per fortnight (50 cents per dollar)
In other words, Margaret keeps most of her pension while also earning $600 a fortnight — a significant improvement to her overall financial position.
Key Takeaways
You can work while receiving the Age Pension — there is no hours limit.
The Work Bonus disregards the first $300 per fortnight of employment income from the income test.
Unused Work Bonus accrues in an income bank, up to $11,800.
New pensioners receive a $4,000 starting credit in their Work Bonus income bank.
You must declare your employment income to Centrelink — the Work Bonus is applied automatically.
The Work Bonus applies to employment and self-employment income only — not investment or deemed income.
