WORKING ON THE PENSION
Work Bonus and Age Pension: how the income bank works
The Work Bonus can reduce eligible work income counted under the Age Pension income test. Unused amounts may build up in an income bank for later work. This guide explains the mechanism and its limits, separately from the ordinary income free area.
OFFICIAL RULES CHECKED 22 AUGUST 2026
How the Work Bonus works.
The Work Bonus excludes the first $300 of your fortnightly employment income (or self-employment income involving active personal effort) from the Age Pension income test — on top of the normal income test free area you already get. Any unused amount accrues in an income bank you can draw on later.
| Feature | Amount |
|---|---|
| Fortnightly exemption | First $300 of employment income excluded from the income test |
| Maximum income bank balance | $11,800 |
| How the bank is used | The bank offsets eligible work income above the fortnightly concession until the balance is used. The bank cap is not an annual earnings allowance. |
| Who qualifies | People of Age Pension age receiving an eligible Age Pension, Carer Payment or Disability Support Pension, subject to the payment rules. Transitional-rate pensioners are not eligible. Separate eligibility rules apply to DVA payments. |
| Applies automatically? | Yes — Centrelink applies it automatically once you report employment income |
Source: Services Australia — Work Bonus.
The income bank is the part people miss.
If you earn less than $300 in a fortnight — or nothing at all — the unused portion adds to your income bank, up to a cap of $11,800. That means someone who isn’t working now but starts a seasonal or casual job later can draw down a large bank balance and earn well above $300 a fortnight for a stretch before the income test bites.
Worked example
Linda, 69, receives an eligible Age Pension and has confirmed that her Work Bonus balance is $11,800. She takes on 12 weeks of seasonal retail work earning $900 a fortnight. In this simplified example, $300 is covered by the fortnightly concession and the remaining $600 by her available balance, so none of that eligible work income is counted while sufficient credit remains.
Frequently asked questions
Does the Work Bonus apply to investment income?
No — it only applies to income from personal exertion, such as wages or active self-employment, not investment or rental income.
Do I need to apply for it?
No, Centrelink applies the Work Bonus and manages your income bank automatically once you start reporting employment income.
Does starting the Age Pension give me a bank straight away?
For a first claim to an eligible payment under the current rules, the starting Work Bonus balance is $4,000. On reclaiming, an existing balance carries over; a balance below $4,000 may be topped up if it has not been topped up in the previous two years. Check your actual balance with Services Australia.
Can self-funded retirees use it?
Only if they’re receiving an eligible income support payment — it doesn’t apply if you’re not on the Age Pension or a similar payment at all.
Apply this to your own plan.
See the Age Pension earnings guide for how work income and the income test fit together.
Use Pension Pilot to explore how work income fits into your retirement plan. Confirm your actual Work Bonus balance and payment assessment with Services Australia. These figures are educational and should be checked against official Services Australia sources before you rely on them.