Let seniors work - and keep their pension

To put it in perspective, this latest weekly rise pays for little more than four litres of fuel in the tank of a single pensioner's car.

"So, what do you want government to do?" I hear you ask.

One great step forward to fix pension poverty, is to reform the clunky and outdated income test for those who want to work.

Let me give you an example of fictional aged care worker to illustrate.

Nora is 68, she's single and recently divorced. Using her savings and her half from the sale of the ex-marital home, she's bought an apartment. With property prices the way they are, she's left with only $150,000 in superannuation.

Her super gives her $8250 a year (at an average of 5.5 per cent per annum) and she receives the full pension of $25,155. She's recently started working as a personal carer for a home care provider to earn additional income.

Under the current rules, she can earn about $10,000 a year without impacting her pension, but her employer, struggling to find workers, has asked her to work another day and likely more.

This creates a problem because the additional day will reduce her pension - to the point where it doesn't seem worth the effort.

For someone like Nora, already working one day, another day would see her lose about $6430 of the $10,000 extra she'd earn.

This is because every $1 earned above the income test limit results in a loss of 50c in the dollar of pension. On top of this she also pays income tax.

This results in losing 64.5 cents in the dollar for every dollar in her additional day of work!

And on top of this, she has to report earnings constantly (fortnightly) to Centrelink to ensure she doesn't end up with a debt to the government.

That's why National Seniors is calling for an exemption from the income test for the hundreds of thousands like Nora with limited savings.

Not only would it help them earn more money in retirement, but all of us would benefit from the increased spending capacity of older Australians.