They say two things are certain in life, death and taxes.
if you are a retiree you certainly wouldn’t put on that certainty list reliable
income from your investments.
in this volatile investment environment, or could you?
is a way for retirees to secure reliable, regular income in a low
rate of return environment, and
for the government it’s at little if no cost to the taxpayer.
is few people know about it.
called the Pension Loans Scheme (PLS) and it’s administered by the federal
government. Despite the name, it’s open to all Australians of Age Pension age.
other words, you don’t have to be
an age pensioner to qualify, it’s open to anyone aged 66 and up who owns
The scheme allows older Australians to access the equity in their home and have funds from that equity deposited fortnightly into their bank account.
more you don’t have to pay it back until you pass on, as the government can
recover the loan from your estate.
before you say reverse mortgage, you don’t get paid in a lump sum and you can
choose to stop it or resume it anytime.
can make repayments whenever you like should you choose to.
are the plusses. It can provide income certainty at a time of uncertainty
as we are all experiencing right now.
still it will act as a stimulus to the economy as the growing number of older
Australians will be able access their own money and spend it, helping to grow
Seniors recently urged the government to promote it as a means of helping older
Australians access more capital in retirement during a crisis.
could also use the extra funds to pay for extra care to stay in their own home rather
than move into a nursing home. Given the current aged care crisis and the high
rate of infection and death in residential care homes, more and more people will
want to do that.
only problem is this. The interest rate charged by the government is too
high at 4.5 per cent.
With the cash rate at just 0.25 per cent we are campaigning for the PLS rate to be cut to a fairer rate. It could be cut by half and the government would still be in front.
this low rate environment, we believe the PLS is a scheme that can help out
older Australians doing it tough from a volatile market or who are struggling
to pay for their own care.
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.
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.
the government was to cut the interest rate, it would attract more older
Australians to the scheme meaning they’d be able to better fund their own
retirement using their own money, not the government’s, at a time when their
retirement income is uncertain.
makes sense doesn’t it?
However, unlike death and taxes, common sense is not one of life’s
Lobbying for changes to the Pension Loans Scheme is just one of the key recommendations we will be putting forward to the government.
To find out what else we've got planned in the policy and advocacy space, check out our interview with National Seniors' Manager of Policy and Advocacy.