Centrelink’s Pension Loan Scheme allows a retired person on a part age pension to borrow against the security of their home (or other property) at 5.4% pa interest to subsidise their living costs.

The amount of the loan is limited to the difference between the full and the part pension, so in a way it’s a top up facility. It’s paid fortnightly as part of the usual age process.

Not everyone is eligible. Persons who receive a full age pension are not eligible. And persons who fail both the assets test and the income test, i.e. who do not receive any pension, are not eligible. So it’s available to persons getting a part pension.

PLS loans are not that common, and it’s hard to see why. They make a lot of sense, and the relatively low cap, i.e. the difference between the actual and the full pension, means its unlikely age-pensioners will be evicted from their homes by Centrelink.

The interest rate is 5.25% charged fortnightly, which equates to an effective interest rate of 5.4%. You can negotiate a better deal through a mortgage broker and or bank.

If a married couple’s client’s part pension was hypothetically $5,000 and their full pension $23,160 the amount of the loan would be capped at $18,160 a year or about $700 a fortnight. If their home is worth say $700,000, and is otherwise unencumbered, it is unlikely that the home loan will every catch up with the home value, or even come close to it.

The extra $700 a fortnight will make all the difference to your everyday living expenses and your day-to-day quality of life, and may even allow them to avoid selling their home or other quality assets.

This system is a great idea and awareness of it can help reduce the anxiety of ageing, if you are over 65 and are on a part pension, please speak to us, please remember all our senior citizens with a pension card receive our massive 50% off all our services excluding filling out pension forms. Check out the special here.