Pension Loans Scheme
A scheme that uses the capital you have tied up in real estate as a non-taxable loan.
Eligibility & payment rates
The Pension Loans Scheme is a voluntary arrangement that provides support in the form of a loan for either a short time or an indefinite period.
It is paid in fortnightly non-taxable instalments. You can nominate to receive an amount up to the maximum Age Pension rate.
You may be eligible for a loan under the scheme if:
- you or your partner is of age pension age
- you have equity in real estate in Australia to use as security for the loan
- you or your partner receives a reduced, or nil, rate of a qualifying payment for the scheme due to the application of either the income or the assets test, but not both, and
- you meet Age Pension residence requirements
You can get a top up payment under the scheme if you receive less than the maximum rate of:
- Age Pension
- Bereavement Allowance
- Carer Payment
- Disability Support Pension
- Widow B Pension
- Wife Pension
The scheme is not available if you receive the maximum rate of any of these qualifying payments. However, you can access the loan if you are of age pension age but, because of assets or income but not both, are either ineligible for a qualifying payment or only eligible for a reduced payment rate.
Making a claim under the scheme does not stop you from making a claim under the assets hardship provisions. However, you will only be paid under one of these provisions.
All costs associated with establishing, changing and finalising the loan, such as legal and solicitor costs, are your responsibility. We will send you a letter when the loan has been established, to tell you the amount we will recover from you. You can choose to pay these costs immediately or we can add the costs to the outstanding loan balance.
Compound interest is charged on the outstanding loan balance. Currently, the rate is 5.25%. The interest rate is applied to the outstanding loan balance each fortnight. Interest continues to accrue until the loan is repaid and increases the amount to be repaid. The longer you take to repay the outstanding loan balance the more you will have to repay at the end of the loan.
The outstanding loan balance consists of the principal loan amount plus accrued interest plus any outstanding costs, minus any repayments made.
Your scheme payment is reviewed regularly.
You can repay a loan under the scheme in part or full at any time. If you wish to sell the real estate used as security for the loan, you need to contact us before organising the sale. You will need to make arrangements for the loan to be repaid at the time of the sale.
The loan can also be repaid from your or your surviving partner’s estate after your death.
You can nominate to get a top up amount of payment each fortnight under the scheme. The amount you receive can be up to the maximum amount allowed for your payment type.
The total loan amount you can get depends on:
- the equity you have in the property you offer as security
- the equity you wish to keep in the property, and
- your age when the loan is granted
The loan payments you receive are not subject taxable.
Your loan must be secured by Australian real estate in which you have an interest, for example your principal home.
You may also be able to use Australian real estate owned by a private company or trust, for which you are attributed as controller, as security for a loan under the scheme.
We register a charge with the Land Titles Office on the title deed of the property you offer as security. You will have to pay any costs associated with registering and removing this charge.
The real estate you offer as security for your loan will be valued independently by a licensed valuer. This is done at no cost to you.
If you have more than one property, you can choose which to use in the assessment for a loan.
Once you have read about eligibility the next steps are:
- register an intent to claim
- complete your forms and meet with a Financial Information Service officer
- submit your claim form and supporting documentation
- we will assess your claim and let you know the outcome
Managing your payment
You need to tell us when your circumstances change, for example before you sell the property you used as security for your loan.
You need to let us know about any changes to your circumstances within 14 days in case they affect your loan payments.
There is support available to help you manage your money if you have overdrawn your bank, building society or credit union account.
We offer a free and confidential Financial Information Service (FIS) to help you with your financial matters.
Before submitting your claim you must meet with one of our FIS officers to discuss the terms and conditions of the scheme. The FIS officer will provide information on the issues you should consider when deciding whether to apply for the scheme.
To speak to a FIS officer, call 132 300.
Select the options that describe your circumstances, then explore a list of possible Centrelink and Medicare payments and services online.
Select your state and topics of interest to find links to government and community organisation support.