Pension Bonus Scheme
This page provides information about the Pension Bonus Scheme (the scheme). This information includes what the requirements of the scheme are, and what changes may affect your bonus.
On this page
- What is the Pension Bonus Scheme?
- Who can receive it?
- Age Limits
- What is accruing and non-accruing membership?
- What is the work test?
- What work do I have to do?
- What if I take leave from work?
- What records do I have to keep of my work?
- How do I know if I am fulfilling the work test?
- What happens if my retirement benefits are still to be finalised?
- What happens to the bonus if I die before I get paid?
- Giving away your income and assets
- How much you can receive
- How you claim
- What to tell us
- Important information
What is the Pension Bonus Scheme?
You may receive a lump sum bonus if you have registered in the scheme and have kept working past qualifying or pension age instead of claiming an income support payment. Refer to Age Limits below for further information.
Income support payments include:
- Service Pension
- Social Security Age Pension
- Income Support Supplement (ISS)
The scheme does not prevent you from claiming an income support payment. You can claim at any time after registering. The longer you work and defer claiming an income support payment, the higher your bonus may be (noting there is a bonus maximum).Back to top
Who can receive it?
The scheme closed to new registrations on 1 July 2014. You can still get a Pension Bonus if you meet all of the following:
- registered for the scheme before 1 July 2014
- are eligible for Service Pension, Social Security Age Pension or Income Support Supplement (ISS) but have not claimed it
- kept working for at least 12 months from the date you registered for the scheme
- did paid work for at least 960 hours in the first year, and in any other year that will count towards your Pension Bonus
Paid work can include self-employment. Paid work in this context means effort to provide goods or services for financial reward. It doesn’t include managing your financial investments or domestic work in your own home.
If you did not register for the Pension Bonus Scheme before 1 July 2014, you may be eligible for the Work Bonus instead.Back to top
Before the scheme was closed to new registrations, veterans with qualifying service and war widow(er)s could register when they reached qualifying age. Qualifying age is the pension age which would apply to you if you were a veteran. Veteran pension age (qualifying age) is earlier than Social Security Age Pension age. Qualifying age is currently 60 years.
People eligible for Service Pension Partner could register when they reached pension age.
If you are claiming Service Pension as a veteran, or ISS as a War Widow(er), you cannot accrue any more Pension Bonus once you turn 70 but may remain a member of the scheme if you or your partner continue to meet the work test.
If you are claiming Service Pension as a partner of a veteran, or claiming the Social Security Age Pension, you can’t accrue any more Pension Bonus once you turn 75 but may remain a member of the scheme if you or your partner continue to meet the work test.Back to top
What is accruing and non-accruing membership?
Once you have registered for the scheme you will generally be an accruing member when both of the following applies:
- for as long as you meet the work test
- until you reach the upper age limit.
Only accruing membership can be counted towards your bonus.
However, your membership may be classed as non-accruing if you meet one of the following:
- you give away money or other assets in excess of the allowable limits (for more information refer to ‘Giving away your income and assets’ below)
- you start receiving a Carer Payment from Services Australia
- you fail to meet the work test in specified circumstances such as:
- leave periods for up to 26 weeks
- participation in Community Development Employment Projects
- you are not working and your working partner is not a member of the scheme.
During a period of non-accruing membership you are still considered a member of the scheme, but you cannot accrue bonus. You may start to accrue bonus again after the non-accruing period has finished.Back to top
What is the work test?
To meet the requirements of the work test you must meet all of the following:
- you have worked for a minimum of a year after reaching the pension/qualifying age
- you have worked a minimum of 960 hours for each year you have deferred claiming the pension
- you have worked at least 640 of these hours in Australia.
You need to work 960 hours during each 12 month period (bonus period) following your registration. This is an average of 20 hours per week, allowing for four weeks annual leave.
Provided you still work at least 960 hours during the 12 months, if you take more than four weeks leave, this will not affect the accrual for the bonus. You will still be regarded as an ‘accruing member’ and remain qualified during this time.
In the final bonus period, if you work less than 12 months, the work test will be determined on a pro rata basis for the part-year bonus period.Back to top
What work do I have to do?
Any work you do must be paid work, e.g. for wages, fees or salary. Gardening or housework for your own home, or managing your own investment portfolio or family trust, does not count as work for the purpose of the bonus. Voluntary work for a charitable, welfare or community organisation does not count for the purposes of the work test for the scheme.
There is special consideration if you cannot meet the work test as a result of a major disaster, such as a cyclone.Back to top
What if I take leave from work?
Leave (like time off for holidays, long service leave, personal or family leave and unpaid leave) does not count as work for the purpose of the work test.
You may be treated as a non-accruing member for up to 26 weeks during a period of leave. This period will not count towards your bonus but you can remain in the scheme.
When you return to work, you can resume accruing membership if you meet the work test. If you do not return to work, or your leave exceeds 26 weeks, or you are unable to meet another kind of non-accruing membership, you will need to claim your bonus.Back to top
What records do I have to keep of my work?
In order to determine whether you pass the work test for each accrual period you will need to provide a record of all of the following:
- the kind work you have been carrying out
- name and contact details of your employer/s
- the dates you worked
- the total number of hours worked for each 12 month period
- the total number of hours worked in Australia (if any).
The record may be kept in diary format or you can use Form D0640 Pension Bonus Scheme 52 Week Work Record, which is available from DVA. You must also be able to provide DVA with your tax returns, payment summaries, payslips or any other work related document, if requested to do so.Back to top
How do I know if I am fulfilling the work test?
You have the choice of either:
- contacting DVA for a work test assessment at the end of each year
- being assessed when you are ready to claim the pension and bonus.
If you are not sure you are meeting the requirements of the work test, you should not delay in contacting us for advice.Back to top
What happens if my retirement benefits are still to be finalised?
The relationship between the pension rate and the amount of bonus means you will generally benefit by claiming your pension and bonus after employment income ceases and/or superannuation arrangements are finalised. However, to lodge your claim in time, you may need to claim pension and bonus while your finances are unresolved following retirement.
A Pension Bonus ’top up’ may be payable if your pension rate increases in the first 13 weeks of payment, due to a reduction in your income and/or assets. The top up is the difference between the actual bonus paid and the amount of bonus that would be payable, had the highest pension rate in the 13-week period been substituted as the annual pension rate in Pension Bonus formula.
There is no specific claim for a top up to the bonus. You should let us know within 14 days of changes to your income and assets. Should your notification result in an increased rate of pension, the top up will be calculated and paid automatically.Back to top
What happens to the bonus if I die before I get paid?
If a person dies before submitting a claim for Pension Bonus, their partner may be eligible to claim a Pension Bonus bereavement payment, in lieu of the bonus payable to the deceased member.
To claim the Pension Bonus bereavement payment, the surviving partner should contact us to discuss their particular circumstances and request the necessary claim forms.
If you are registered separately for the scheme, you do not lose your own Pension Bonus entitlement if your partner dies. However, if you are not working and have been relying on your partner’s work to meet the work test, you will either need to start work or claim your bonus within 26 weeks of your partner’s death.Back to top
Giving away your income and assets
If you give away income or assets, you may not accrue a bonus for a period of five years from the date you make the gift, when you give away more than:
- $10,000 in a financial year
- $30,000 in a rolling 5-year period.
These rules also apply to gifts:
- you made before registering as a member of the scheme
- of smaller amounts that added up to more than either limit. The five years starts from the date the gifts went over the limit.
It is also important to note that if you decide to give away income or assets over these limits within the 5 years before you claim a pension, the rate of pension may be affected. For more information refer to Giving Away Income or Assets.Back to top
How much you can receive
How much you receive will depend on both:
- your income and assets at the time you claim the Service Pension, Social Security Age Pension or ISS
- how long you have kept working instead of claiming a pension
It is not possible to calculate the exact amount before you claim. In general, the amount is based on all of the following:
- the amount of income support payment you would get in a year
- your income and assets when you claim
- the number of years you have worked instead of claiming a pension.
We may use a different formula if your situation changes between registering for the scheme and claiming a pension. This would apply if you start or stop living with a partner during that time, or if you claim a different income support payment from the one you intended to.
To calculate an estimated amount of Pension Bonus you may be able to receive, refer to Pension Bonus estimator.Back to top
How you claim
When the time comes to claim your bonus and pension, you need to lodge the bonus and pension claims together. If you cannot continue to meet the work test, or you decide to stop working, you have 13 weeks from that date to lodge a claim for the pension and Pension Bonus at the same time. The lodgement period may be extended if the delay was due to extenuating circumstances.
DVA can give you the necessary forms or you can access them on the DVA website.
You need to be in Australia to claim your pension and pension bonus. If you are not in Australia when you make your claims, you will not receive a bonus.
If you registered for the Pension Bonus Scheme before 1 July 2014, you can make an application for a Pension Bonus when you claim Service Pension, Social Security Age Pension or Income Support Supplement.
You can download and complete the D559 form to claim Pension Bonus.Back to top
What to tell us
As a Pension Bonus Scheme member, you do not have to keep us informed of changes to your circumstances.
However, you may wish to notify us and discuss the impact on your Pension Bonus entitlement due to changes in your personal or financial circumstances, such as:
- change of address
- marriage, separation, death
- giving away assets, or income
- reduction in working hours
- if you and/or your partner start to receive a payment, or a Pension Bonus from Services Australia.
If you claim and your income and assets are too high for us to pay you an income support payment, you will not get any Pension Bonus.
While you and/or your partner can continue working past qualifying or pension age, you can only accrue a maximum of 5 pension bonus periods (or 5 years).
It is a good idea to get financial advice about when to stop working and claim a pension.
You may not need to stop working to claim a pension and get your Pension Bonus. You may then be able to benefit from the Work Bonus.
If you and your partner both registered for the Pension Bonus Scheme before it closed, and only one of you is working at least 960 hours a year, you can both get a Pension Bonus. If you both work, you can’t combine your hours to make a total of 960 hours between you.
We calculate your Pension Bonus based on the basic rate of your income support payment plus the basic pension supplement. We do not include any other supplements or allowances.Back to top