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Pension Loans Scheme – how does it work?


On the pension, asset rich but cash poor? Read on.

If you own your home but are struggling to meet daily living expenses (maybe because of the fall in term deposit rates) or you just want to top up your Age Pension payments to meet rising living costs, then the Federal Government’s Pension Loans Scheme (PLS) might be for you.

The scheme is available to retirees of Age Pension age, who own Australian property and meet pension eligibility requirements.

Under the scheme you can supplement the fortnightly pension up to a maximum of 150 per cent of the fortnightly Age Pension rate including pension and energy supplements and any rent assistance.

A couple on a combined fortnightly pension of $1,407 can receive a combined additional payment of up to $703 per fortnight as PLS payment.

The maximum loan depends upon your age when you apply for a loan, the value of your property and how much equity you would like to retain in your home.

Interest rate


Thanks to the advocacy of bodies like National Seniors Australia, the government last year dropped the interest rate applied to the PLS from 5.25 per cent to 4.5 per cent, making the scheme more attractive.

The annual interest rate of 4.5 per cent compounds fortnightly on the outstanding loan balance. The longer you take to repay the loan, the more interest you pay.

Any payments you receive under the Pension Loans Scheme are not subject to income tax.

How is the loan recovered?


If there is an outstanding loan at the time of your death, the amount will usually be recovered from your estate. Interest will continue to accrue until the loan is repaid.

If your spouse is also eligible for loan payments and wishes to keep receiving them, payments will continue and recovery of the loan may be deferred until their death. On their death the loan is recovered from the estate.

Is the PLS loan right for you?


Before applying consider:

  • your current and future financial situation
  • the impact of compound interest on the loan
  • the repayment of the loan.

In this regard, Services Australia recommends you seek independent legal and financial advice before applying for a loan under the PLS.

They also recommend you chat with a Centrelink Financial Information Service officer to discuss whether a PLS is right for you.

To speak to the Financial Information Service, call 132 300.

How to apply


The easiest way to apply for a PLS loan is online.

View the department’s step by step guide here.

You need to have a ‘myGov’ account or register for an account if you don’t already have one.

There is a range of documents you will need to submit and may have to provide again, even if you have done so previously.

The department advises that identity documents must be presented in person at a service centre, so that Centrelink can confirm your identity before you can make an application.

You can contact Services Australia by phone from this list of contacts.

Access a copy of the PLS application form here.

Advocacy wins


Thanks to your support, we were able to push for a broadening of the PLS and lowering of the PLS interest rate.

Together, we can - and do, make a difference.

Read about our advocacy wins here.

You can join our free campaigns via the advocacy section of our website.

You can also join our Advocacy Supporters Group.

Learn more

Join us today

Share your voice and select the benefits that matter to you with a National Seniors membership.

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