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Calculation of Pension Loan

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Maximum Pension Loans Scheme loan available

    

Each fortnightly payment made under the pension loans scheme increases the amount owed by the pensioner under the scheme. Accordingly, ongoing payments can only be made until the balance of the loan reaches the maximum loan available to the person under the scheme.

The maximum loan available to a person is calculated according to a set formula using the age component amount to set a loan limit as a percentage of secured assets.

The maximum loan amount increases on each relevant birthday taking into account the new age component amount and the latest asset valuation on the secured assets.

Calculating the maximum loan

VEA ?

Section 52ZCA(1) VEA - Maximum loan available under the Pension Loans Scheme

Section 52ZCA(3) VEA - Age component amount table

VEA ? (go back)

The maximum loan available to a person under the pension loans scheme can be calculated using the following equation:

Maximum loan  =  Age component amount  x  (value of real assets - guaranteed amount)  /  $10,000

Value held for real assets

    

If the value of a persons real assets is greater than $10,000; their value is rounded down to the nearest multiple of $10,000. If the value of the real assets is less than $10,000; their value is taken to be nil.

Effect of guaranteed amount on maximum loan available

Nominating a guaranteed amount and thereby excluding a portion of the asset value over which a charge is to be placed also reduces the maximum loan available because it has the effect of reducing the value of real property.

Assessing the fortnightly Pension Loans Scheme loan rate

    

If a person is eligible for payment under pension loans scheme, the loan rate is determined by either:

  • A top-up amount, comprising the difference between:
  • the rate of pension assessed under the normal income / assets test; and
  • the maximum pension rate including allowances, except remote area allowance, applicable to the person's circumstances, or
  • a lower amount nominated by the pension loans scheme recipient.

A pensioner can choose between a fixed fortnightly loan payment and one which varies with any change to their pension entitlement.


An age component amount is used for varying ages to set a loan limit as a percentage of the secured assets. The age component amount is intended to take into account the risk of debt exposure of the Commonwealth by reference to a person's current age.  Its aim is to ensure that sufficient real assets are available to repay the loan at the time of recovery.

A person's age for the purpose of the table is his or her age at his or her last birthday.  In the case of a couple, it is the age of the younger member of the couple on his or her last birthday. Refer to subsection 52ZCA of the VEA for a full definition and the Age Component Amount table.

An age component amount is used for varying ages to set a loan limit as a percentage of the secured assets. The age component amount is intended to take into account the risk of debt exposure of the Commonwealth by reference to a person's current age.  Its aim is to ensure that sufficient real assets are available to repay the loan at the time of recovery.

A person's age for the purpose of the table is his or her age at his or her last birthday.  In the case of a couple, it is the age of the younger member of the couple on his or her last birthday. Refer to subsection 52ZCA of the VEA for a full definition and the Age Component Amount table.

Real Assets includes any real estate of the person in Australia (including the principal home) nominated by the person as security but excluding any specified property which the person wishes to exclude. Refer to subsection 52ZAAA(1) for a full definition.

 

 

A guaranteed amount is the minimum amount (if any) that a pension loan scheme participant or their estate is entitled to retain from the proceeds of the enforcement of a charge on their assets by the Commonwealth. Any guaranteed amount is to be specified by the participant in the scheme.

A guaranteed amount is the minimum amount (if any) that a pension loan scheme participant or their estate is entitled to retain from the proceeds of the enforcement of a charge on their assets by the Commonwealth. Any guaranteed amount is to be specified by the participant in the scheme.