FAQs

The Pension Loans Scheme (PLS) has been in operation in various forms since 1985 and it is one of the Australian Government’s best kept secrets. The intent of the PLS is to assist seniors fund their regular costs of living by accessing some of the equity they have in their home or property.

Historically the PLS hasn’t had significant take up by seniors due to its restrictive eligibility rules, and not being actively promoted by the Government. However, that all changed on 1 July 2019 as now all Australian resident seniors who own property can access the PLS.

The PLS is a ‘reverse mortgage’ style contract where the Australian Government provides you with a loan amount each fortnight – at a maximum payment level of 150% of the Full Age Pension less any government pension you currently receive. The loan is secured against any property you own in Australia (unfortunately you cannot use relocatable homes or property in retirement villages under the scheme). A ‘reverse mortgage’ simply means you are not required to make any repayments during the term of the loan, although you certainly can if you wish to, and have the funds to do so.

Interest is charged on the outstanding loan amount each fortnight (currently the rate is 4.5% p.a. variable). As you do not need to make any loan repayments the interest compounds over time (in other words you will be charged interest on the interest).

You will generally be required to repay the loan when you (or your surviving partner if you’re in a relationship) either:

• Permanently move out of your home; or
• Sell your property; or
• Pass away, in which case the proceeds of your estate will be used

The Australian government is the provider of the Pension Loans Scheme and the Scheme is administered via the Department of Human Services/Centrelink and for veterans via the Department of Veterans Affairs (DVA).

The Australian Government has provided the Pension Loans Scheme (in various forms) since 1985.

No. The rule changes effective from 1 July 2019 expand the PLS to be accessible to all Australian resident seniors who have sufficient equity in their property - including self-funded retirees.

If you are currently receiving the Age Pension or similar seniors welfare payment (or a DVA pension) and you own property in Australia, you will most likely meet the eligibility criteria.

To be eligible for the PLS you (or if you are in a couple relationship at least one of you) need to meet the following criteria:

1. Meet Centrelink’s Australian residency requirements:
You need to have been an Australian resident for at least 10 years in total. For the last five (5) of these years, there must not have been any break in your residency.

• You are an Australian resident if you live in Australia and are either:
  1. An Australian citizen; or
  2. A permanent residence visa holder; or
  3. A protected Special Category visa (SCV) holder

2. Be at least of Age Pension Age which is currently 66 years old but increasing to 67 as shown below:

3. Own real estate property in Australia which includes:

• Houses *
• Apartments / Units / TownHouses *
• Farm (or hobby farm)
• Commercial premises
• Retail premises
• Vacant land / bush block
• Home office / business
• Self contained flat (part of or attached to a residence)
• Market garden
• Residential block larger than 2 hectares

* There are two notable exceptions (due to not having title to the underlying land)

• Retirement villages
• Relocatable homes

Generally retirement villages and relocatable homes do not include title over the land on which the dwelling/building resides, which is why the government does not accept these forms of property as security for Pension Loans.

It is dependent on:

• The amount of any Age Pension (or similar welfare payment e.g. widows pension) you (or you and your partner) receive
• The net equity (i.e. the value of your property less any loans secured by that property) you have in your property
• Your age or the age of the youngest partner, if you’re in a couple relationship
• The amount of Pension Loan per fortnight you wish to access
• The value of any Requested Amount (i.e. an amount of equity you always wish to keep in your property) you determine

* The Pension Loan Scheme maximum is 150% of the Full Age Pension (which includes any Age Pension received)

Examples of maximum Pension Loan Payments for different pension status:
We recommend you try our Pension Boost Calculator to see what the PLS might mean for you.

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Note: Whilst these tables show the maximum Pension Loans Scheme levels as at 20 March 2020, you can select any payment amount up to the maximum.

If you choose the maximum level, your Pension Loan payments will automatically change when the Age Pension payment rates are adjusted for inflation (usually in March and September each year).

If you chose a set amount (say $500) then this payment level stays the same until you advise Centrelink/DVA you wish to change it.

The term over which you could potentially receive payments under the PLS is dependent on:

• The amount of any Age Pension (or similar welfare payment e.g. widows pension) you (or you and your partner - if applicable) receive
• The net equity (i.e. the value of your property less any loans secured by that property) you have in your property
• Your age, or the age of the youngest partner, if you’re in a couple relationship
• The amount of Pension Loan per fortnight you wish to access
• The value of any Requested Amount (i.e. an amount of equity you always wish to keep in your property) you determine

Generally speaking, the older you (and/or your partner) are, and the higher the net equity in your property, the longer the Pension Loan payments can be made.

We recommend you try our Pension Boost Calculator to see what the Pension Loans Scheme might mean for you.

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The PLS interest rates is 4.50% pa (current as at 16 November 2020) and it is a variable rate charged on the PLS loan balance at the end of each fortnight until the PLS loan is fully repaid. This compares very favourable to commercial reverse mortgage rates which range from 4.95% pa to 5.85% pa (current as at 16 November 2020).

Whilst you are not required to make any payments of this interest but you can if you wish to and can afford to.

The government does not charge any PLS application, establishment, valuation or similar charges to set up the loan. There are also no ongoing fees and charges with the PLS.

There is a legal charge to prepare and lodge a caveat on the title to your property which is usually in the range of $450 to $650 depending on which State your property is located in. This charge is normally added to your PLS loan at the beginning so you are ‘not cash out of pocket’.

The PLS has a number of factors which can influence the options and outcomes. We recommend you try our Pension Boost Calculator to see what the Scheme might mean for you.

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Of course you can! You just need to ensure you communicate your changes to Centrelink/DVA. The PLS includes options to:

• Take ether the maximum payment or a lower amount
• Reduce or increase the payment amount (within the maximum permitted)
• Pause your payment for a period if you don’t need the funds
• Restart your payments if you need the funds again
• Select a ‘Requested Amount’ or not

Pension Boost can assist you in relation to managing your Pension Loan on an ongoing basis to ensure you remain in control of your finances.

You can use the payments you receive each fortnight under the PLS for any purpose you wish. This could be to fund regular bills, pay for in-home care services, enjoy life’s little luxuries, a short holiday, take care of those repairs you’ve been putting off - whatever you like.

No. We’ve now run literally 1000’s of Pension Boost Calculator scenarios for seniors and the median home value is $500,000. Somewhat surprisingly, a significant proportion of seniors using our calculator have mortgages outstanding. A significant majority of seniors are on the Full Age Pension and advise us they are struggling to make ends meet.

Unlike many commercial reverse mortgages which have strict rules around the type of property or its location (eg only capital cities), the government accepts all forms of Australian based real estate property. This includes houses, units, flats, town houses, semi detached homes, self contained flats, farms, vacant land, bush blocks, commercial/industrial/retail premises, business premises and large residential blocks. However please note that there are two (2) exceptions to this, which is due to the typical ownership structure not including title to the underlying land:

1. Retirement villages
2. Relocatable homes

No. Whilst the Pension Loans Scheme is linked to the Age Pension (by the maximum payment level being tied to 150% of the Full Age Pension), accessing the PLS does not impact your Age Pension entitlements.

No. The Pension Loans Scheme is a loan-based payment scheme, drawing on the equity (capital) you have built in your home, so it does not impact your income tax position.

No problem - just select the level of payments you need each fortnight. You can always change the level of payments by notifying Centrelink/DVA. Pension Boost can assist you to determine the level of Pension Loan that you’d be comfortable with.

Yes. When your property is sold if the proceeds of the sale are insufficient to repay the debt on your Pension Loan (known as ‘negative equity’), then you (or your estate) will continue to have a debt owing to the Australian Government that will keep accruing interest until the Pension Loan is fully repaid.

Important: The Pension Loans Scheme (PLS) is NOT covered by the provisions of the ‘No Negative Equity Guarantee’ regulations under the National Consumer Credit Act which have applied to providers of commercial reverse mortgages since 2012.

Pension Boost believes this is an example of ‘double standards’ being applied by the government. The PLS is a reverse mortgage style contract – it is a loan secured via a registered charge over real estate property – generating a commercial return for the government (through the interest rate charged on the Pension Loans less the government’s cost of funding the Scheme), with the repayment obligation deferred until the property is sold. Whilst the government technically classifies the PLS as a ‘welfare payment’, the PLS operates on a similar basis to many of the regulated principals that commercial reverse mortgage providers are legally bound to comply with.

On the basis the PLS is in substance a ‘reverse mortgage’ seniors accessing the PLS should be provided the same ‘no negative equity’ protections as under regulated reverse mortgages.

Pension Boost advocates that the PLS should afford the same senior consumer protections to PLS borrowers as those seniors who choose commercial reverse mortgage solutions.

Support our advocacy efforts by signing our petition to amend the PLS in order to protect seniors and their estates from adverse outcomes in the event of negative equity situations.

Sign The Petition

Pension Boost recommends you discuss your situation with your family before considering applying for the PLS. We are also happy to talk with them, if required, as we often have children of seniors enquiring on behalf of their parents.

A feature within the PLS is the ‘Requested Amount’, which is an amount you can ask to be reserved for you for your future needs (like aged care facilities) or your estate.

No. Rather than a full registered mortgage the government secures its Pension Loan to you via a ‘registered lien’ or ‘registered charge’ over the property you put up as security for your Pension Loan.

There are a few ways of applying:

1. Directly via Centrelink (online): To access this method you need a myGov account and a Centrelink Online Account linked to your myGov account. For more information about this option please visit https://www.humanservices.gov.au/individuals/services/centrelink/pension-loans-scheme/how-apply
2. The easy way via Pension Boost’s PLS Application service: How we assist you:
   • We provide you with a free Personalised Pension Loans Scheme Report
   • Our friendly PLS specialists are available to respond to any questions you have and guide you through the process
   • We assist you to select the right Pension Loan for your circumstances
   • We prepare your PLS application for you
   • We lodge your PLS application with Centrelink or DVA for you
   • We manage any queries Centrelink/DVA raise in assessing you application
   
   
   

   Essentially - we take the hassle out of dealing with Centrelink / DVA
   
   

   We also provide an optional ongoing service to help you remain in control of your Pension Loan and the net equity in your property.

You will need to provide copies of the below when you start your PLS application:

• Your property Title Deed or Certificate of Title; and
• A recent Land Valuation Notice or Council Rates Notice; and
• Your current insurance policy over the property; and

If you have an existing loan secured over the property, you also need to provide copies of a:

• Recent loan statement
• Loan contract

Approval of a Pension Loan application is made in writing by Centrelink / DVA and this usually occurs in 4 - 8 weeks, depending on the complexity of the application.

Whilst there is no obligation to make any repayments of the PLS until you either permanently vacate your property or you, or your estate, sell the property you can make voluntary repayments of some or all of the PLS loan at any time without penalties or fees.

The process though is not as simple as making repayment of bank loans.

You need to arrange either a bank cheque or money order and post this to Centrelink/DVA along with your name and Customer Reference Number (CRN) details.

The 2020 Federal Budget intends for Centrelink/DVA systems to be enhanced to provide improved PLS functionality from July 2021, including a proposal for electronic repayments

Provided you meet the residency, pension age and property ownership criteria if your property is co-owned with a third party then you are still eligible for the PLS but only for your relevant pro-rata share of the net equity in the property.

The co-owner(s) need to consent to your applying for the PLS and they must sign their section of the PLS application in front of a suitably qualified witness (eg Justice of the Peace).

Provided you meet the residency, pension age and property ownership criteria then if your property is owned by a closely held private company or private trust then you are still eligible for the PLS.

There maybe additional forms that may need to be lodged in relation to the company or trust and the company or trustee will need to provide a written guarantee in relation to the PLS debt.

Pension Boost is a private commercial venture founded by Paul Rogan in 2019, and our purpose is to assist everyday Australian seniors to live a better life. There are 1.8 million seniors on the Age Pension who own property, with many struggling to make ends meet.

Pension Boost are specialists in the Australian Government’s Pension Loans Scheme (PLS). We act as your agent when dealing with Centrelink/DVA to take the hassle out of the process for you.

Some of the ways Pension Boost assists seniors includes:

• Raising awareness of the PLS (one of the government’s best kept secrets)
• Educating seniors on what the PLS is, its ‘rules’ and how it works
• Assisting seniors and their families decide whether the PLS may be of benefit to them
• Demonstrating to seniors via our Pension Boost Calculator what the PLS may mean for them financially
• Determining the type of Pension Loan that best suits a senior’s individual circumstances
• We remove the hassle of dealing with Centrelink/DVA by acting as an ‘agent’
• Assisting seniors with their application for the Pension Loan
• Dealing with any questions or queries raised by Centrelink/DVA
• Providing ongoing reporting and reviews of a senior’s cash flow needs and Pension Loan level, to ensure they remain in control of the net equity in their home, and have the funds to make ends meet

You can learn more in the About Us section of our website

PLS Application Service

See our Services & Fees page