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If you’re 65 or over and want to work, you’re far better off in New Zealand than Australia, says Peter Martin

Economy / opinion
If you’re 65 or over and want to work, you’re far better off in New Zealand than Australia, says Peter Martin

By Peter Martin*

Want to keep working after you’ve reached pension age?

The Australian government has just made it a little bit easier, increasing the amount you can earn per year from work before losing some of your pension by A$4,000 on an ongoing basis.

Late last year, it temporarily upped the so-called work bonus from $7,800 per year to $11,800 to “incentivise pensioners into the workforce”. It was part of the government’s response to its September jobs and skills summit.

It meant pensioners could earn an underwhelming $227 per week from work without harming their pension, up from the previous $150.

The rules for older workers are very different in New Zealand. In fact, if Australia adopted New Zealand’s approach, we could have an extra 500,000 willing workers – a fair chunk of them paying tax.

What’s NZ doing differently for older workers?

Last month, as part of his employment white paper, Australian Treasurer Jim Chalmers made the increase to $227 per week permanent.

Chalmers headlined the announcement: Getting more Australians back into work.

But it’s doing an underwhelming job. In Australia, 15.1% of the population aged 65 and older are in some kind of paid work, up from 14.7% a year earlier.

In contrast, in New Zealand the proportion has just hit 26%. That’s right: more than one-quarter of New Zealanders aged 65 and older are employed.

It’s a similar story if we look at how Australia and New Zealand compared to others internationally on labour force participation (which covers those in paid work plus people actively looking for it).

New Zealand wants to see that number rise further. It has been talking about 33.1% of its population aged 65 or more in paid work, which is what Iceland has.

What is New Zealand doing for over-65s that Australia is not?

You won’t find it mentioned in either treasury’s employment white paper (released in September) or intergenerational report (released in August) – even though National Seniors Australia pointed it out in submissions.

One crucial thing New Zealand is not doing is annoying pensioners who work.

Australian pensioners in paid work get called in for discussions with Centrelink, if it looks as if they are at risk of doing too many hours and going over the $227 per week limit.

The more you work, the more your pension is cut

Pensioners who do go over the $227 per week limit lose half of every extra dollar they earn in a cut to their pension.

Plus tax, this means they lose a total of 69% of what they earn over the limit where their tax rate is 19%, and 82.5% on the portion of earnings taxed at 32.5%.

And this is after the boost designed to “incentivise pensioners into the workforce”.

Last year’s jobs summit also set up a Women’s Economic Equality Taskforce. It reported this week, drawing attention to the “disincentive rates” facing second earners (usually women) who return to work after caring for children.

It said that taking the loss of benefits, tax and childcare costs together, the penalty for returning to work was more than half of what was earned on the first three days of the week, and up to 110% of what was earned on the fourth and fifth days.

My point here is that the losses facing age pensioners who attempt to work are of a similar order – in Australia but not in New Zealand.

Australia’s rules aren’t just stopping pensioners from taking on extra hours. They seem to stop them taking up paid work at all.

There were 2.6 million Australians on the age pension in June this year. Only 83,925 reported income from working. That’s just 3.2%.

NZ pensioners keep their pensions

What’s different about New Zealand is that New Zealand’s pensioners don’t face a penalty if they work. They simply face income tax.

In New Zealand, the age pension (which is called superannuation, making it confusing for Australians) is paid to everyone of pension age. There’s no income test or assets test. You get it because you are a citizen or permanent resident.

Australia wouldn’t need to go as far as New Zealand to get the same benefit. We would simply need to ditch the pension income test in cases where that income came from paid work, leaving the assets test in place.

Then there would be no concern about working.

Half a million reasons for change

If we made that change – and if the same proportion of older Australians chose to work as New Zealanders – we would soon have an extra half a million older Australians able to step into fields such as teaching, where there are 15,500 vacancies, and health care and social assistance, where there are 68,100 vacancies.

It would cost the federal government money because it’d put more Australians of pension age on the pension.

But it’d cost less if we abolished the special tax concession for seniors and pensioners, known as the seniors and pensioners tax offset. In New Zealand, senior citizens face the same tax rates as everyone else.

And it would cost less as more pensioners earned wages and paid income tax.

Calculations prepared for National Seniors Australia by Deloitte suggest that beyond a certain point, the change would become revenue-positive – actually boosting federal coffers – as the extra income tax revenue outweighed the cost of the extra pensions.

National Seniors is calling its campaign “let pensioners work”.

$100 notes
Australians hold an unusually high number of $100 notes. Shutterstock

Tapping into the cash economy

Importantly – and here’s where we get to a fact National Seniors might not like me mentioning – that would happen not only because more senior Australians were employed, but also because more senior Australians were employed legitimately.

It’s hard to get a handle on how many senior Australians are working and being paid in cash, which they store rather than bank to avoid tripping the income test. But we do know this.

At the end of March, there were 18 Australian $100 notes in circulation for each Australian resident, an astonishingly high proportion given the use of cash for transactions is collapsing.

In New Zealand at the end of March, there were just five New Zealand $100 notes in circulation for each New Zealand resident.

That may be just a coincidence.

But New Zealand is certainly making it easier for retirees to work legitimately, rather than stay at home or accept cash in hand.The Conversation

*Peter Martin, Visiting Fellow, Crawford School of Public Policy, Australian National University. This article is republished from The Conversation under a Creative Commons license. Read the original article.

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The idea that a birthday at 65 is so disabling that retirees can no longer work, (more disabling than actual physical disabilities and degenerative medical conditions that cripple people's limbs in the spate of a few years) was always ridiculous and is just extremely entitled and lazy in this day and age. Whereas those same people collecting a pension benefit to literally choose not to work always start beneficiary bashing the disabled and proclaiming that a person with severe muscular dystrophy should be out picking fruit (when they literally physically cannot lift their arms). Which is telling. Who is the actual lazy one that they could not even look up the statistics of the group they are abusing and have such poor understanding of medical and work requirements they don't even know what a fruit picking job entails. Also many retirees are so clueless they don't know that many disabled people unable to work have no access to income support or benefits at all. Because benefits for disabled people are MEANS TESTED and those they live with and often FORCED TO LIVE WITH to have access to housing can mean they are denied access to income support for themselves. Thus increasing rates of abuse against the disabled population. 

You can always actually compare the access & health of a countries workforce by the access and ability for ACTUAL DISABLED people to find work. In NZ the disabled unemployment rate for those who WANT to work is GREATER THAN 50%. The NZ real unemployment rate is huge as those without access to work are immediately discounted from unemployment statistics that exclude disabled people.

NZ is less more access to the job market, rather it is more the high cost of living and housing means people often cannot stay in high priced rentals via the pension alone and the costs of transport in NZ for our main cities is very prohibitive. Sure people can be stuck in a home all day but that comes with severe physical and mental damage to the person, (much like the disabled community which has resulted in the worst wellbeing in NZ than any other social or ethnic group). In addition knowing many people above the ages of 60 and 90 who still work there can be other social harm reasons forcing them to do so, such as the lack of addiction medical support in NZ which means people are often trapped with steadily worsening symptoms and forced to be re-exposed to their addictions just to remain in what they feel is their community and social circle.

NZ also has steadily dropping rates of home ownership, and less access to housing than Australia, so take a guess as to our growing proportion of retirees who still work.

Japan is another good example where many retirees actually look to commit crimes so they can take advantage of prison housing to reduce bills temporarily and save up the pension. As a social behaviour phenomenon it is an interesting case demonstrating many retirees do work or will do anything they have to, to have housing.

Australia is actually leading NZ by 20 years in providing accessible work to people who want work. America is over 3 decades around 35 years ahead of NZ and actually mandates that you cannot deny access to people with disabilities to businesses, workplaces, and transport. Which means not only can people with disabilities have more access to be customers they have more access to be employees and business owners. Hence America and Australia have groundbreaking better access to employment than NZ. 

So yeah NZ is quite literally just getting those physically able to work to choose to work because it is increasingly hard to afford rental housing on a benefit. That those people are over 65 is immaterial to their ability to work. Hence the often frequent choice of those over 65 to not work and just get a benefit.


If I earn $50000 a year, I pay a certain amount of tax. If I get a pension plus income equalling $50000, I pay the same tax. It's not rocket science. How can there be countries that do not do this?


Or, another way to look at it is a higher percentage of people over 65 are poorer and need to work in NZ.