The Pension Loans Scheme (PLS) is a federal government program designed to provide support for eligible Australian pensioners in the form of a tax free, fortnightly income stream by taking out a loan against the equity in their home. It is administered by the Department of Human services and distributed by Centrelink.

Lots of people ask us about the PLS and the differences between it and a Household Loan, which is a kind of reverse mortgage.

What is the Pension Loan Scheme or PLS?

Launched in 1985, the PLS aimed to assist ‘assets tested’ age pensioners. It was expanded in 1997 to include income tested age pensioners and then again from 1 July 2019 to extend eligibility to a broader range Australian pensioners of Age Pension age, including those currently receiving the maximum rate Age Pension.

The PLS allows you to borrow up to 150% - or 1.5 times - of the maximum Age Pension, paid fortnightly.


Who can get the Centrelink Pension Loans Scheme?

There’s a range of eligibility criteria to qualify for the PLS, including you must:

  • be of Age Pension age
  • qualify for or receive an eligible payment; this includes the Age Pension, disability support pension and widow’s pension
  • own real estate in Australia with enough equity to secure the loan
  • have adequate insurance covering the secured real estate
  • not be bankrupt or subject to a personal insolvency agreement.

How much can I borrow with the PLS?

The maximum total loan available is a function of your age, the equity you have in your home and the value of your property. This limitation exists so you don’t end up owing more than your home is worth.

The maximum income available - combined Age Pension and PLS income stream to 150% of the Age Pension rate per annum; this currently corresponds to:

  • a maximum $36,121.80 per annum for singles
  • a maximum $54,451.80 for couples

Individual amounts are dependent on whether applicants receive a full or part pension.

Income received via Centrelink’s reverse mortgage or PLS is not taxable and does not count in terms of the Age Pension income test.

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What is the current interest rate of the Centrelink PLS?

The interest rate is currently 5.25%. It is set by the Minister for Social Services without reference to RBA rates – this rate has remained static since 1997.

While there are no establishment fees or monthly account fees, Centrelink may charge costs including legal fees. These costs are determined once the loan application is made and can either be paid immediately or added to the loan balance.

Learn about our Household Transfer interest rates.

How does a Household Loan differ from the Centrelink’s Pension Loan Scheme?

Household Loan PLS
Homeowners 60+ Pension age
5.15% 5.25%
$50,000-$500,000 Up to 150% of Age Pension per fortnight
All metropolitan postcodes and some regional areas Most areas
20% of house value at age 65, then 1% each year 25% of house value each at age 65, then approximately 1.1% each year
Lump sum and income stream available Income stream only
Is a reverse mortgage and subject to the National Credit Code (NCC) including its consumer protections, and ASIC’s Regul Not a reverse mortgage and not subject to NCC or its consumer protections
Personalised service by Household Capital team Administered via Centrelink and subject to in-store or phone queues

Australian retirees really value their pension and they really want to stay at home. Responsible, long-term use of home equity can provide a retirement income stream to supplement super and the Age Pension. Using a Household Loan, it can also provide lump sum payments to top up your super, modify or renovate your home to make it comfortable for retirement or have a ‘rainy day’ fund for unexpected expenses.

How might this help me?

Explore your potential Household Transfer using our needs-based calculator.

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