As of 1 July 2019, the human services websites says you can apply for the Pension Loans Scheme (PLS) even if:
- You’re getting the maximum rate of pension;
- You have a payment rate of $0 under both the income and assets tests.
You must still qualify for an eligible pension to access the PLS.
The fortnightly loan amount you’ll be able to get has also changed. It’s increased from 100% to 150% of the maximum fortnightly rate of your eligible pension. In other words, you can get up to 1.5 times the maximum rate of pension each fortnight as a loan.
If you currently get a pension, the combined pension and loan amount can’t exceed 1.5 times the maximum pension rate.
Kim currently gets the Age Pension. She gets the maximum single rate including supplements. This means Kim gets $926.20 a fortnight. Under the rules in place before 1 July, Kim couldn’t get a loan under the PLS. This was because she was already getting 100% of the maximum pension rate.
However, Kim can now apply for a loan of 50% of the maximum pension rate. This means her combined pension and loan amount will be 150% of the maximum pension rate. Her fortnightly rate will increase from $926.20 to $1,389.30.
Other changes to the Pension Loans Scheme
There are also additional obligations you must comply with. You need to:
- Have enough insurance covering the real estate used as security for the loan;
- Not be bankrupt or subject to a personal insolvency agreement.
Repaying your loan
Repaying your loan hasn’t changed. You must repay your loan under the Pension Loans Scheme to the Commonwealth. We charge 5.25% compound interest per annum. We charge the interest on the balance of the loan each fortnight. Compound interest increases the amount you must repay.
Remember, always seek advice from a financial advisor or lawyer before making any decisions about the PLS. This includes if you’re currently in the Pension Loans Scheme and you’d like to increase the loan amount you get. If you decide to do this, contact us on the Older Australians line.
Find out more about the Pension Loans Scheme.
Get your FREE 5 Easy Steps to Plan Retirement One-Page planner from the Resources
Got questions? If you want experts who have years of helping others, without the hype –
then call for a FREE strategy session today
No obligation call 0407 361 596, Paul
What are your thoughts? Start or continue the conversation here!