Legislative Authority

Veterans' Entitlements Act 1986
Sections 52ZAAA to 52ZN

Stated Current Purpose/Intent

To provide income support in the form of a loan to a person who has assets which reduce, or cancel payment of, service pension or income support supplement, and where the assets are in a form which is difficult to convert into cash to cover the ordinary expenses of living.

Current Eligibility Criteria

It is assumed that a person who owns substantial assets can use them to produce income and meet living expenses.  However, situations may arise where a person is unable or, for good reasons, unwilling to re-arrange his or her assets.

The pension loans scheme allows a person to receive a payment in the form of a loan. The amount payable is 150% of the maximum pension rate.  This payment attracts interest and is generally repayable from the person's estate.  The loan may be paid for a short period while the person's assets are being re-arranged, or for an indefinite period.

A person is eligible if he or she:

• is a veteran or war widow/er who is 60 years of age - or is the partner of a veteran and is pension age (for pension ages - see Tables);
• is in receipt of, or eligible to receive, a service pension or income support supplement;
• would receive a rate of service pension or income support supplement greater than nil under either the income or assets tests.

It is a requirement that all applicants have adequate insurance of the secured asset and not be bankrupt (or have a personal insolvency agreement).

Date of Introduction

1985

Original Purpose/Intent

The Government introduced the Pension Loans Scheme in 1985 to enable those pensioners whose assets excluded them from receiving a service pension or whose rate of payment of service pension was reduced under the assets tests, to qualify for income support.  The amount of money paid to a pensioner each fortnight was equal to the rate of pension assessed under the income test.

Such support is considered to be a debt to the Commonwealth attracting interest against the value of the funds advanced at a rate set by the Minister for Families, Housing, Community Services and Indigenous Affairs.  Strict rules regulate the granting of these pensions by the Department and the recovery of the debt incurred.

If a veteran subsequently becomes eligible to be paid a service pension or other income support, pension paid to the veteran under the Pension Loans Scheme is deducted from his or her fortnightly payment.

Significant Changes in Criteria or Purpose Since Introduction