Older Australians can earn less for working more in a perverse quirk of the tax system, incentivising pensioners to withdraw from the workforce at a time the nation is grappling with extreme skills shortages .

A report by financial consulting firm Retirement Essentials shows Australians on the age pension are often hit with effective marginal tax rates of between 60 and 80 per cent – and in some cases as high as 122 per cent – far beyond the tax rate of those in the highest income bracket.

An effective marginal tax rate is the share of an extra dollar of income lost to either income tax or a drop in government transfer payments, such as the age pension.

Commissioned by industry super fund HESTA, the report shows working aged pensioners earning $55,000 actually take home more money tha

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