Can't we have both? Couple win lottery but lose age pension

Australia's reliance on the pension is due to decline, according to a landmark report due to be released.

A couple who lost their aged pension when they won the lottery have asked a finance guru how they could have had their proverbial cake and eaten it too.

The couple, aged 73 and 67,wrote to Sydney Morning Herald columnist Noel Whittaker with their $1,000,000 dilemma, saying they had stopped receiving their full aged pension upon receiving the winnings, which they had placed in a high-interest savings account.

They intend to use the money to buy a new house so they can sell or renovate their existing home, they explained.

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"The windfall has stopped our pension completely until we spend the money, which is all good and well. But could we have prevented the pension loss in any way?" they asked.

Whittaker responded that the couple should consider themselves extremely fortunate and enjoy the money.

Enough said.

But just for fun, here's everything you need to know about the age pension.

Is every Australian entitled to a pension?

Yes and no. The eligibility criteria includes residence rules, income and assets tests and of course, an age requirement.

You usually need to have been an Australian resident for 10 years in total, and have had at least five years with no break in your residence.

There are some exemptions from the residence rule for refugees, widows and those who've worked in specific places abroad.

You must be 67 years or older.

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How much is the aged pension in Australia?

How much you get depends on your income and assets, and whether you're single or in a couple.

The maximum rate for singles is $1020.60 and for couples is $1538.60 a fortnight.

There are also some supplements available for utility and medicine-related costs which boost this amount by about $100 a fortnight.

How much money can you have and still get an age pension?

There is both an income and assets test which affect how much you can receive.

Income can include wages, real estate income, deemed income from investments and superannuation, distributions and dividends, and more.

Assets include financial investments, including, as the couple above discovered, cash in the bank, managed investments and superannuation, trusts, real estate, cars, shares, and money you give away.

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The cut-off income point at which you receive no age pension is $2444.60 for singles and $3737.60 combined for couples who live together.

The assets cut-off point for a full pension is $314,000 for homeowner singles and $470,000 for homeowner couples.

For non-homeowners the cut-off point is $566,000 and $722,000 respectively.

For a part pension, the cut-off points are higher, up to $1,283,000 for non-homeowner couples.

Can I get the age pension if I have super?

Yes, so long as you meet the income and assets tests.

Will the age pension ever stop in Australia?

As Australia's population rises, many Australians are concerned the age pension will become unsustainable and could be wound back or even abolished.

A myth also persists that superannuation, which was introduced in the late 1980s and became compulsory in 1992, was intended to get people off the pension. This is not true.

Superannuation was intended to relieve pressure on the welfare system, and create a higher standard of living for retirees, but not to replace the age pension.

"The pension will always be there for those who need it," then Prime Minister Bob Hawke said in 1989.

Today, the age pension is strongly supported by both major parties, not least because abolishing it would mean political annihilation.