Age pension increase welcome, but barrier to work remain for retirees

HESTA

19 September 2025

HESTA welcomes tomorrow’s increase to the Age Pension, providing additional support to retirees facing rising inflation and cost-of-living pressures. The fund is also continuing to call for change to Work Bonus thresholds to reduce barriers for pensioners who want to work.

A new HESTA member survey of retirees reveals 43% receive either a full or part Government Age Pension, highlighting the significance of this increase.

HESTA CEO Debby Blakey said while the higher payment was welcome news, more needed to be done to support retirees to have more choice and control in how they fund their retirement.

"While this increase will help ease cost-of-living pressures, our research shows significant barriers remain for pensioners who want to continue contributing to the workforce," Ms Blakey said.

“The current system hasn't kept pace with this modern reality of retirement,
and doesn’t effectively support retirees who want to continue contributing to their communities and the economy.

"We continue to call for the Work Bonus payments thresholds to be indexed to Average Weekly Ordinary Time Earnings (AWOTE). This isn't just about allowing retirees to work without facing extreme effective tax rates, it's about recognising and supporting the various ways people want to experience their retirement years."

Recent HESTA-commissioned research highlighted how older Australians receiving the Age Pension face effective marginal tax rates of 60% to 80%, creating significant disincentives to workforce participation.

The results of the fund’s new member survey, released today, shows superannuation remains the primary source of retirement funding, supported by various income streams including the Age Pension, employment income, and household savings.

It also reveals the top reasons for returning to work, which are led by social interaction (28%), financial reasons (26%), and fulfillment and purpose (23%).

"Our research shows that retirement today is deeply personal and multifaceted. People are seeking social interaction, purpose, and fulfilment through work, as well as financial benefits,” Ms Blakey said.

"Many of our members want to continue making valuable contributions to the health and community services sector, bringing decades of experience and mentoring capabilities that are invaluable in addressing workforce shortages.”

One HESTA member, Kim Gardner, 68, who works in GP accreditation following a 30-year career as a General Practice Manager, has experienced these tax impacts firsthand. After qualifying for the Age Pension at 65, now working between one to five days each week, she has seen the direct impact of these high effective tax rates on her income.

"I’m shocked to see the impact the current system has on my earnings,” Ms Gardner said. "It feels like we're being penalised for wanting to continue contributing to the healthcare sector."

Ends.

About HESTA

HESTA is one of the largest superannuation funds dedicated to Australia’s health and community services sector. An industry fund that's run only to benefit members, HESTA now has more than one million members (around 80% of whom are women) and currently manages approximately $98 billion* in assets invested around the world.

*Information is current as at the date of issue.