For months, I have been calling for the abolition of the pension income test so seniors can take on additional work without losing access to the Aged Pension.
A broad coalition of groups recently backed the call, arguing that retaining more people in the workforce longer reduces the need to fill skill gaps with migrants.
ABC News reported growing pressure on the federal government to ease pension rules to allow older Australians to work without losing benefits:
“More older people now are getting to retirement age, and they may continue to have a mortgage. More people are getting to retirement age, and they’re single. So they have a different financial situation”, Patricia Sparrow from Council of the Ageing told the ABC.
Industry groups also want the rules around the aged pension relaxed to encourage more seniors to stay in the workforce.
“They have experience, they have the skills. That’s important. There’s a huge benefit for the economy if they want to continue in the workforce”, Andrew McKellar from the Australian Chamber of Commerce said.
The federal government should abolish the income test for the aged pension, as such a move could encourage hundreds of thousands of senior Australians to return to the workforce.
In turn, such a policy would increase labour supply without adding to demand or exacerbating pressures on infrastructure, services and housing.
According to the Australian Bureau of Statistics (ABS), Australia had just over 5 million people aged 65 or over in September 2026.
As of September 2026, exactly 16% of senior Australians participated in the labour force, up from just over 6% in 2004:
By comparison, 26% of seniors in New Zealand participate in the labour market, where the aged pension is not means-tested. This figure is 10% higher than in Australia:
Therefore, if Australia raised the labour force participation rate for people aged 65 and over to New Zealand’s level, it would add roughly 500,000 people to the labour force, about 3% of the current labour force.
Even getting halfway there and adding 250,000 extra workers would offer major benefits to pensioners themselves and the economy.
These extra senior workers would increase the labour supply without increasing demand, bolstering the economy without the negative externalities of immigration-driven population growth.
One Nation is the only major party with a policy that would let pensioners and veterans work and earn money without affecting their payments, while taxing their income “like any other worker”.
