Prime Minister Anthony Albanese, Treasurer Jim Chalmers announce changes to pension rules

This means they will be able to earn $11800 a year, or approximately $75 more a week.

Dr Chalmers said the policy change would cost the government $55 million.

"The older Australians who want to work can earn more income before their pension is reduced and [we] will move quickly to change the law," he said.

An immediate $4000 income credit will be added to the income banks of age pensioners from December, to be used by the end of the financial year on June 30, 2023.

The government says only around 3 per cent of pensioners report employment income, but around 96 per cent have a total income amount of $7800.

The government also pledged to expedite legislation to ensure pensioners don't have to reapply for payments for up to two years if their employment income exceeds the income limit.

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Currently their connection to social security is cancelled after 12 weeks of exceeding the income limit.

"Instead of pensioners having their payments cancelled after 12 weeks if they exceed the income limit, they won't have to reapply for payments for up to two years," Dr Chalmers said.

"[This is] one of the things that does make older Australian workers a bit reluctant, in the sense they may get thrown off and have to run the gauntlet again to get back on the pension. We want to take that away."

Dr Chalmers said pensioners will also retain access to their Concession Card and associated benefits for two years.

He said the Labor government has been considering measures to increase workforce participation among older Australians since before the election.

"Some older Australians stay in the workforce longer because they have to," Dr Chalmers said.

"And some do it because they want to, because they love what they do, because their job is part of their identity, a source of friendship and stimulation and pride."

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Ian Yates from the Councils on the Ageing welcomed the scheme but said more needed to be done.

"There's an awful lot of older Australians between [50 and 67] who want to be working and who are long-term unemployed and we have to work out how to unblock that as well," he said.

"I think we need some decent research into what would be the trigger points for people [to work more on the pension]."

Queensland Premier Annastacia Palaszczuk said retired nurses should be allowed to work full-time while also earning a pension.

"In regional Queensland, healthcare is a really big issue, trying to attract our nurses and doctors to go out to more rural and regional areas," she said.

"We could have an extra 2000 healthcare professionals across Queensland tomorrow."