Congratulations! Winning the lottery is an exciting moment that many people dream about, but it's important to consider how it may impact your Age Pension.
As a pensioner, you may already be familiar with the various conditions, eligibility requirements, and tests that can affect the amount of pension you receive. Winning the lottery can add an additional layer of complexity to the equation, especially because there are two different types of winnings you can receive: a lump sum amount or a set-for-life arrangement where you receive a regular monthly payment for an extended period.
Let's take a closer look at how each type of winning can impact your Age Pension:
If you receive a lump sum through winnings or gambling, it is not treated as income by Services Australia (Centrelink). Though it may still affect your pension rate. Should your bank account balance and total assets exceed the asset limit.
If your winnings amount to a lump sum of $1,000,000 and your total current assets already exceed that amount, you would likely be pushed over the asset limit and your pension would cease.
On the other hand, if you only won a smaller amount, such as $10,000, the increase to your overall assets would be much smaller, and your pension rate may not be affected at all.
Whatever the case always check after a major windfall.
The periodic payments of a set-for-life winning are treated as income by Services Australia (Centrelink). They are assessed each time they are paid, for the duration of the winnings.
For example, if you were the only winner of the Division 1 prize for the Set For Life Lottery in Australia, you would receive $20,000 per month for twenty years. These monthly payouts are tax-free, but they could have a significant impact on your Age and disability Pension. If you receive $20,000 per month for 20 years, it would effectively eradicate your Age and disability pension.
Even if you win a smaller amount, such as $5,000 per month, it can still significantly reduce the amount you or your partner may receive due to the Age and disability pension income test.
The Age and disability pension income test uses the gross income of both partners, even if one of the partners does not receive a pension.
In summary, winning the lottery can have a major impact on your Age and disability Pension, depending on the type of winnings you receive and what you do with the money. If you are a pensioner who has won the lottery, it is important to consider these factors and seek financial advice to ensure that you are maximizing your Age and disability Pension while also enjoying your winnings at AWTS we charge a fixed rate to file your age pension documents and we guarantee you will receive at least 50c in a pension if you don't receive it, we don't get paid.