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5.4.1 Overview of Pension Loans Scheme

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Last amended: 18 October 2002

What is the Pension Loans Scheme?

The pension loans scheme is a scheme under which a person can receive a pension top-up in the form of a loan. Certain non-pensioners can also receive a payment. This allows people who have assets in the form of Australian real estate, but insufficient income to properly support themselves, to draw on the value of these assets and be paid an equivalent of the income support they would have otherwise received.

Who is eligible to participate in the scheme

Pensioners (excluding maximum rate pensioners) who are receiving service pension, partner service pension or income support supplement are eligible to participate in the pension loans scheme.

Persons with basic eligibility for service pension, partner service pension or income support supplement and who can satisfy either a separately assessed:

can also participate in the scheme.    

Administration of the scheme

All participants in the scheme need to apply using the Pension Loans Scheme application form. An interview is conduced in all cases to ensure issues associated with participation in the scheme are fully covered.    

Payment of Pension Loans Scheme

This section explains how the amount of the pension loan is calculated, how it is to be paid to the debtor (pensioner), the applicable interest rate and how it is to be managed including the taking of a statutory charge as a security.    

Review of Pension Loans Scheme

Specific changes in personal or financial circumstances may require a full review of the loan or a recalculation of the amount of loan payments.     

Recovery of loan debt

A debt under pension loans scheme is not usually recovered until after the death of the pensioner, however the Repatriation Commission may require a loan to be repaid before death in certain circumstances.     


A service pension is an income support payment broadly equivalent to the social security age and disability support pensions. It may be paid once a veteran or partner has reached the nominated age or is incapacitated for work.

ISS is an income support payment that may be paid to eligible war widows and widowers under the VEA and persons receiving wholly dependent partners' compensation under the MRCA, and who satisfy the means tests. It is an indexed rate, increased twice-yearly in March and September in line with changes to the cost of living and/or average wages. Income Support Supplement (ISS) legislation commenced on 20 March 1995. It is a payment created to replace the ceiling rate income support age, carer, wife and disability support pensions, paid to war widows/widowers by Centrelink.

 

 

One element of the means test for income support pensions whereby the rate of pension payable to a pensioner reduces progressively as their income increases above a certain threshold known as the income free area (IFA).

 

 

One element of the means test for income support pensions whereby the rate of pension payable to a pensioner reduces progressively as their assets increase above a certain threshold known as the assets value limit (AVL).