An increasing number of retirees – many of whom were not financially prepared when they stopped working – are seeking ways to live in their homes and find other sources of income to support their lifestyle.
With more than 3 million Australians over the age of 65 and more than 75% of them owning their homes or property (at values often multiples of their superannuation balances) the option to tap into their home equity to assist funding their retirement is something more Australians are expected to consider. One such option is the federal government’s Pension Loans Scheme (PLS)
What is the Pension Loans Scheme?
The 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 hadn’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, including self-funded retirees.
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 table below provides examples of how this works form different types of retirees.
Per Annum | Couples | Singles |
---|---|---|
Full Age Pension PLS maximum Total | $37,014 $18,506 $55,520 | $24,552 $12,276 $36,828 |
Part Age Pension (example, $300/fortnight) PLS maximum Total | $15,600 $39,920 $55,520 | $7,800 $29,028 $36,828 |
Self-Funded Retirees PLS maximum Total | $nil $55,520 $55,520 | $nil $36,838 $36,828 |
ASFA Retirement Standard – Comfortable | $62,083 | $43,901 |
The PLS loan is secured against any property you own in Australia. Unfortunately, relocatable homes and (most) retirement villages are not eligible security 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. The PLS loan is secured against any property you own in Australia. Unfortunately, relocatable homes and (most) retirement villages are not eligible security under the Scheme.
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.
Government provides Pension Loans Scheme
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).
Pension Boost works on behalf of Retirees considering PLS
Pension Boost is a private commercial venture founded by Paul Rogan in 2019. Its 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). They act as agents for clients when dealing with Centrelink/DVA to take the hassle out of the process.
Some of the ways Pension Boost assists seniors include:
- 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 the Pension Boost Calculator what the PLS may mean for them and their families financially
- Determining the type of Pension Loan that best suits a senior’s individual circumstances
- Removing 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.
Paul Rogan
Founder and CEO
Pension Boost
Sydney
M: (+61) 0423 780 113
paul@pensionboost.com.au
https://pensionboost.com.au