Government drops loan scheme interest rate


More seniors will now benefit from changes to the Pension Loans Scheme, championed by National Seniors Australia.

Key points


  • Pension Loans Scheme allows retirees to access equity in their own home to generate additional retirement income.
  • After 3 years of campaigning from National Seniors, the federal government has announced changes to the Pension Loan Scheme.
  • Changes included a reduction in interest rate from 4.5% p.a. to 3.95% p.a., rebranding to promote the scheme to all eligible Australians of pension age, and enable lump sum payments up to two times a year.

In a big win for seniors, the federal government yesterday announced big changes to the Pension Loans Scheme (effective from 1 January 2022), including a substantial drop in the interest rate from 4.5% to 3.95%

The Pension Loans Scheme allows retirees to access equity in their own home to generate additional retirement income. This is particularly useful for asset rich but cash poor retirees who may be struggling with daily living expenses or those on the Age Pension who want to top up their payments to meet rising living costs. You can learn more about how the scheme works in this article.

National Seniors has been campaigning for the past three years for these changes as part of our Fairness in Retirement Income campaign.

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Pension Loans Scheme changes


The changes announced yesterday include:

  • A reduction in interest rate from 4.5% per annum to 3.95% per annum.
  • Rebranding the name of the program to Home Equity Access Scheme to promote it to ALL eligible Australians of pension age and not just pensioners.
  • Enabling lump sum payments up to two times a year (previously announced).

The two big changes – a lower interest rate and increased awareness of the availability of the scheme – have been the cornerstone of National Seniors’ Fairness in Retirement Income campaign since the last election.

Along with the interest rate for the scheme dropping to 3.95%, eligible retirees can now take out a lump sum twice a year or have fortnightly payments. There is also a ‘no negative equity’ clause.

With most house prices around the country going up, the changes to the scheme will help retired homeowners tap into their equity and have a higher standard of living – which is great for both seniors and the economy.

Next steps for fairness in retirement income


National Seniors Chief Advocate, Ian Henschke says this shows the government is listening to older Australians, who now make up half of all voters.

“It’s good that Minister Ruston and the government have recognised our campaign on the need to rebrand, and to lower the interest rate. The old name of the scheme was confusing. Many people didn’t realise they were eligible and many also were put off by the high interest rate.

“National Seniors is still pushing for a dedicated home care loans scheme with a lower rate of interest to give home care recipients the ability to stay in their own home rather than move into residential care.” said Mr Henschke.

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