Introduction
The Pension Bonus Scheme is no longer open for new applicants, but some Australians are still on it. It is designed to compensate those who have kept working beyond their Age Pension eligibility age and who have delayed receiving the Age Pension accordingly.
Read on to find out all about the Pension Bonus Scheme in Australia, including answers to common questions.
What is the Pension Bonus Scheme?
The Pension Bonus Scheme is a lump sum, tax-free payment that is available to eligible applicants who registered for the scheme before it closed for new applications on 1 July 2014. If you are registered, the Pension Bonus will be paid in a single payment when you stop working and first claim the Age Pension, provided that you are an Australian resident.
To still be eligible for the scheme, you need to have:
- Not ever received the Age Pension or any form of government income support after you first became eligible for the Age Pension (except for a Carer Payment or Carer Service Pension)
- Kept working after your registration for the Pension Bonus Scheme was approved
- Passed the work test rules for at least 12 months after your registration was approved. This means you must have been doing paid or self-employed work for at least 960 hours in each 12-month period after your registration (excluding any type of leave). You can only remain in the Pension Bonus Scheme while you continue to meet the work test requirements.
- Have been an Australian resident for at least ten years, with no break in your residency status for at least five of those years
The Pension Bonus can be accrued for a maximum of five years up until you reach the age of 75. It cannot be accrued beyond the age of 75 unless it is being accrued for a younger partner who is also eligible for the Pension Bonus and who has been accruing it for less than five years.
What are the current rates and thresholds for the Pension Bonus Scheme?
Your Pension Bonus depends on three things:
- Your Age Pension rate at the time you apply for the Age Pension (i.e. if you are only eligible for a part Age Pension, this will reduce the Pension Bonus you will receive)
- The length of your accrual period (i.e. whether you have been working and delayed receiving the Age Pension for one, two, four or five years)
- Your partner status during your accrual period (i.e. whether you were single or part of a couple).
The table below lists the current rates and thresholds. These amounts are reviewed each year on 20 March and 20 September.
Eligible Pension Bonus years | Maximum Pension Bonus (singles) | Maximum Pension Bonus (singles) |
---|---|---|
1 | $2,353.60 | $1,778.70 |
2 | $9,414.30 | $7,115.00 |
3 | $21,182.10 | $16,008.70 |
4 | $37,657.20 | $28,459.90 |
5 | $58,839.30 | $44,468.60 |
Common questions about the Pension Bonus Scheme
You must claim your Pension Bonus within 13 weeks of failing to meet the work test requirements. This claim must be made at the same time as you apply for the Age Pension.
You can still continue in the scheme as a non-accruing member if COVID-19 restrictions forced you to miss work between 30 March 2020 and 31 March 2021. However, only accruing membership counts towards your Pension Bonus payment.
No, they are separate schemes and you can’t be in both. You can find out about the Pension Bonus Scheme for the Department of Veterans Affairs here.
Yes, provided you also meet the Commonwealth Seniors Health Card eligibility requirements.
Summary
The Pension Bonus Scheme is a lump sum, tax-free payment that applies to a reducing number of Australians due to the scheme having not accepted new registrations since 1 July 2014. If you are still registered for the scheme, you need to claim your Pension Bonus payment when you stop working and first apply for the Age Pension.
The information in this article is general in nature.