Liberal backbenchers are calling for next week’s budget to unleash an army of retired workers to boost the employment market.

The politicians are calling for an end to an effective tax rate of more than 60 per cent on pensioners’ incomes.

Under current rules, a single person can earn up to $480 a fortnight without affecting their pension entitlement.

Beyond that, the pension is reduced at 50 cents for every dollar in income and climbs above 60 cents as the income tax threshold starts to affect their pay.

Advocates say excluding worked income from the pension test would help pensioners cope with a rising cost of living, all while filling vacant positions.

National Seniors Australia Chief Advocate Ian Henschke told Sofie Formica as it stands, the system is actively discouraging older Australians from working.

“We’re saying: take the handbrake off, look at New Zealand and look at how many people are working there and contributing,” he said.

“What better way to get more people working and paying tax?”

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