Can Winning the lottery affect your age or disability pension?

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:

Lump Sum Amounts

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.

Set-For-Life Amount Over Time

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.

Centrelink’s Pension Loan Scheme allows a retired person on a part age pension to borrow against the security of their home (or other property) at 5.4% pa interest to subsidise their living costs.

The amount of the loan is limited to the difference between the full and the part pension, so in a way it’s a top up facility. It’s paid fortnightly as part of the usual age process.

Not everyone is eligible. Persons who receive a full age pension are not eligible. And persons who fail both the assets test and the income test, i.e. who do not receive any pension, are not eligible. So it’s available to persons getting a part pension.

PLS loans are not that common, and it’s hard to see why. They make a lot of sense, and the relatively low cap, i.e. the difference between the actual and the full pension, means its unlikely age-pensioners will be evicted from their homes by Centrelink.

The interest rate is 5.25% charged fortnightly, which equates to an effective interest rate of 5.4%. You can negotiate a better deal through a mortgage broker and or bank.

If a married couple’s client’s part pension was hypothetically $5,000 and their full pension $23,160 the amount of the loan would be capped at $18,160 a year or about $700 a fortnight. If their home is worth say $700,000, and is otherwise unencumbered, it is unlikely that the home loan will every catch up with the home value, or even come close to it.

The extra $700 a fortnight will make all the difference to your everyday living expenses and your day-to-day quality of life, and may even allow them to avoid selling their home or other quality assets.

This system is a great idea and awareness of it can help reduce the anxiety of ageing, if you are over 65 and are on a part pension, please speak to us, please remember all our senior citizens with a pension card receive our massive 50% off all our services excluding filling out pension forms. Check out the special here.