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.