Live better by unlocking the value of your home


If you own or have equity in your home then this government-backed scheme could mean a better life. But the government must cut the rate.

You are retired, have a lovely home but the pension or retirement income doesn’t go far enough? It’s the classic case of asset rich but income poor.

Now you can do something about it and boost your retirement income to pay for a more comfortable lifestyle, and support family through these tough times.

It’s called the Pension Loan Scheme (PLS) and is backed by the federal government.

And here’s the THING – you don’t have to be on the Age Pension. The scheme is now open to all seniors of pension age including self-funded retirees.

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How it works


You can draw down on the equity you have in your home by taking out a ‘low’ interest government loan. In return you receive a fortnightly income, which you can use however you wish.

The PLS could be used to:

  • top up existing income from the pension, investments and employment to provide a more comfortable lifestyle in retirement
  • meet income shortfalls during extraordinary events, such as a financial crisis
  • fund health care services including ongoing home or residential care services, or
  • assist family members in financial hardship.

The interest rate is too high


Historically, there has been low take up of the scheme because the interest rate was uncompetitive and the scheme was poorly promoted.

Currently, the interest rate you pay is 4.5%. That’s too high and well above commercial interest rates, which makes PLS unattractive to some retirees.

National Seniors is fighting to have that rate cut further so more retirees can access it and live a better life.

A breakdown


Under the scheme, the government uses the equity in a person’s home to pay them a fortnightly payment. The government recovers the loan and interest from the estate when it is sold or disposed of.

Unlike reverse mortgages, the PLS cannot be taken as a lump sum. It is only paid on a fortnightly basis.

The maximum amount available via the PLS is 150 per cent of the maximum pension rate. As at 14 July 2020, the maximum amount payable was $2,135.40 per fortnight for a couple and $1,416.45 for a single. However, a retiree can choose to withdraw a smaller amount, can stop or start payments at any time and can pay back the loan at any time.

Importantly, PLS payments do not count towards the pension income test or affect the aged care means test. Amounts received from a PLS loan are also non-taxable.  Importantly, PLS payments do not count towards the pension income test or affect the aged care means test. Amounts received from a PLS loan are also non-taxable.

Here's an example of how it works.

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Let's fight for a better deal


Improving the PLS is a simple way that government can use the current low interest rate environment to help older Australians unlock equity in their home and allow retirees to fund a better retirement. Join National Seniors or sign up to the Fairness in Retirement Income campaign to show your support.

Sign up to the Fairness in Retirement Income campaign or show your support by becoming a National Seniors member.

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