Do I want to do that?
Not everyone does and the money we're talking about offered under the Pension Bonus Scheme isn't enough to change your mind if what you really want to do is stop working as soon as possible. But for those older Australians who are enjoying their work and perhaps need a few more years to build up their super, the scheme is a nice little extra.
How does it work?
Laura Menschik, the managing director of Millennium Financial Services, says you need to register for the bonus when you reach pension age (now 65 for men and about 61 for women, though that age is gradually being lifted to 65). Centrelink says you should register within 13 weeks of reaching pension age; later applications can be accepted but your registration will begin from the date of application, not your birthday. You also need to meet the age pension residency requirements. Registration simply means filling out a form available from your closest Centrelink office or by phoning 132 300.
Once you've registered, you need to work at least 960 hours in gainful employment each year an average of 20 hours a week over 48 weeks. At least 640 of these hours must be worked in Australia.
If you meet the work test, you qualify for a bonus after a year of delayed retirement. But at the time you claim the bonus, you must be eligible for the age pension; if you don't meet the income and assets tests for the pension, you don't get the bonus.
How much is it?
It depends on how long you continue working. You get a multiple of 9.4 per cent of the basic age pension for each year you work.On current rates for a single person, that's $1,003 for one year, $4,013 for two years, $9,029 for three years, $16,052 for four years, and $25,081 for five years.
If you're part of a couple, the maximum bonus payable to each partner is $837 for the first year, then $3,349, $7,535, $13,397 and $20,932.
But it's worth remembering that these rates only apply if, at the time you retire, you're entitled to a full age pension. If you're only entitled to a part-pension, the bonus is reduced proportionally.
When do I get the money?
You generally have to claim the bonus and your age pension within 13 weeks of ceasing to meet the work test. Centrelink requires you to provide information showing you have met the work test. It suggests you do this on an annual basis to keep things simpler and will issue a letter to certify you've met the test over each 12-month period.
What happens if I die before I claim the bonus?
It's not transferable, so it can't be paid to your estate or heirs.
Even if my partner is working for both of us? There are some special rules for couples. Centrelink says if you are relying on your partner's work to keep you, both partners should register for the scheme. Then only one of you will need to pass the work test and you can claim the bonus if your partner dies though you'll need to claim both the age pension and your bonus within 26 weeks of your partner's death.
You can also register to become a member of the scheme if you are still working but your partner is on the age pension.
Can I claim the bonus if I've already retired and want to go back to work? If you've already claimed the age pension, the answer is no. The bonus is only eligible to people who have not received the age pension or other income support.
It all sounds terribly complicated. Where can I get more information? Centrelink has all the details and, in addition to the contact points listed earlier, it has information on its Web site at www.centrelink.gov.au.
The Department of Veterans' Affairs has a similar scheme for people entitled to a DVA pension. Try your local DVA office or phone 1800 555 254 if you live outside the metropolitan area.
Each week financial advisor Noel Whittaker answers your
questions.
