Age pensioners who want to keep working say system punishes them

As Australia's population ages, it is expected more people will want to continue working beyond retirement age, whether for financial reasons or otherwise.

It has prompted renewed calls from advocates and industry groups to relax the rules around working on the age pension, which some say unfairly punishes them.

South-east Queensland 71-year-old Peter Gibney would go as far as to say the system is stacked up against he and his wife continuing to work.

Having worked in retail for decades, he is not interested in slowing down.

"There's none of this airy, fairy stuff ... it's down on the ground dealing with customers and staff, training staff and getting the load done," he said.

Despite his enthusiasm for his job, Mr Gibney feels he is being unfairly punished. Both he and his wife, who works as a teacher's aide, receive part age pensions. 

However, the more they work, the more of their age pensions they lose.

Without large superannuation balances, and with a mortgage, giving up work is something they also cannot afford to do right now.

Bringing in some extra money gives them additional financial security.

"It is freedom, to a degree. The downside is that it's stacked against us doing those things," Mr Gibney said.

Complex rules around pension and work

A spokesperson for the Department of Social Services said the current rules around working on the age pension mean a single pensioner with no other income can earn up to $526 a fortnight before the pension begins to reduce.

That's because of a system called the work bonus, where the first $300 of work income a fortnight is disregarded from the income test.

A couple with no other income can earn a combined $996 a fortnight if both are eligible for the work bonus.

Council on the Ageing (COTA) Australia chief executive Patricia Sparrow has called for that system to be "simplified".

The Department of Social Services said age pensioners who work keep more of their age pension now than four years ago.

A department spokesperson said the government is committed to reviewing the rate of social services payments in each budget.

There are overseas examples to look to. New Zealand has a system where the pension (NZ Super) is paid on a universal rate.

Mr Gibney believes "the ideal situation would be the old age pension is for achieving an age ... it's payback for 40, 50 years of paying taxes".

More older Australians expected to keep working

According to COTA's latest state of the older nation report, about 15 per cent of Australians aged over 67 continue to work, up from 11 per cent in 2021.

Almost 25 per cent are not opposed to returning to work in some capacity.

As the population ages, and more people begin to retire with mortgages or without a partner, those numbers are expected to rise.

"We're really urging government to look at the things we need to do right across the system to make sure that older people can continue to support themselves, contribute to the community," she said.

Ms Sparrow said one of the main barriers keeping older Australians out of work is age discrimination, an issue she said needed to be addressed to ensure fair workforce participation.

Industry groups also want to unlock an older workforce to help boost productivity.

Productivity benefits touted

Australian Chamber of Commerce and Industry (ACCI) chief executive Andrew McKellar said more needed to be done to encourage older Australians who want to continue to be able to work without them facing a "significant" penalty.

ACCI advocates for a "more flexible" system and a doubling of the work bonus to $600 a fortnight.

"[Older Australians] have experience. They have the skills. That's important," he said.

"There's a huge benefit for the economy if they want to continue in the workforce."

Mr McKellar said even part-time work could help alleviate productivity challenges in the economy, particularly in sectors which continued to struggle for staff.

And the benefits for people like the Gibneys go beyond the economic.

Mr Gibney believes it is important to stay connected to the community for the mental health and social benefits and for him and his wife to continue to have separate interests from one another.