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5.4.5 Review of Pension Loans Scheme

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Last amended 
25 June 2015
Change in pension entitlement

If any changes in income or assets and pension entitlement occur as a result of a DVA or pensioner initiated review, the amount of the loan payments will need to be recalculated if the pensioner has chosen to receive a loan as the difference between the rate of pension assessed and the maximum rate of pension.

Recalculation of loan payments is not required for pensioners who chose to receive a set rate as a loan unless their pension rises so that the rate they are receiving under the pension loans scheme plus their new rate of pension exceeds the maximum rate payable.    

 

Change to guaranteed amount

    

 

A request to change the guaranteed amount or withdraw from the pension loans scheme can be made at any time to DVA in writing and must be signed by the veteran and their partner if they are a member of a couple.

A request to increase the guaranteed amount is subject to the pensioner remaining under the maximum loan applicable to their circumstances. An increase in the guaranteed amount requires a re-assessment of the pension loan to ensure that the assets on which the charge is placed are still sufficient. This may require a re-valuation of assets by a property valuation service provider.

Revaluation of property/asset

Valuation of the real estate used as security on a pension loans scheme loan is conducted at the time of grant and each year following the grant. Property valuations are done by a property valuation service provider at no cost to the client.

If any changes are made that may impact on the value of the property, a revaluation may be required. For example, the creation of an easement, that limits the way part of the property can be used, will require a revaluation by a property valuation service provider.

A check should be made after each revaluation to ensure that the pension loans scheme recipient has not exceeded their maximum loan and is still entitled to ongoing pension loans scheme payments.    

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Calculation of the maximum loan available

5.4.4/Calculation of Pension Loan

 

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Pensioner becomes a member of a couple

If a pensioner becomes a member of a couple, a review based on the new circumstances is necessary to establish continued entitlement to any payment of pension under pension loans scheme. Payment under pension loans scheme is suspended until the new member of a couple signs a Pension Loans Application. The suspension is lifted and payment resumed to one or both members of the couple if continuing eligibility is established and a valid application is made by the new partner.

Separation of a couple

If a couple with a debt under pension loans scheme separate, a full review of the pensioner's circumstances is required. The review needs to establish:

  • whether any asset securing a debt is affected by any property settlement,
  • what impact this may have on continuing eligibility for payment under the pension loans scheme, and
  • what impact this has on recovery of the debt.
Relocation of a separated couple

If the pensioner or pensioners decide to relocate and their principal residence is the secured asset, the person's entitlement must be reassessed to decide whether it is appropriate to allow transfer of the charge to the new property. This depends on the value of the new property offered as security. There must not be a time gap between the sale of the old property and the purchase of the new property. Effectively, the old debt is recovered and a new assessment is done using the new property as security.

Each separated person needs to qualify for payments in their own right to continue in the scheme.

Portability of payments under pension loans scheme

The same portability provisions apply to the pension loans scheme as apply to service pension and partner income support supplement.    

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Portability of service pension and income support supplement

Chapter 11.4 Portability of Pensions and Allowances

 

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The Department of Veterans' Affairs.

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 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.