Back in 2018 the Government expanded the Pension Loan Scheme (PLS). This expansion had been a policy proposal from the Australia Institute for many years. We talked about expanding the PLS in 2014 in a paper Boosting retirement incomes the easy way.
The PLS allows those on the age pension to access some of the value of their home without having to sell it. The PLS, which is effectively a government run reverse mortgage, has the potential to make a real difference to people’s lives. Giving older Australians extra cash, at no cost to government, allows many people to continue to live in their own home with more financial security.
But this scheme has languished since 2018 because not many people know about it. In this budget the Government has announced a number of changes and have also allocated funding to raise awareness of the PLS through improved public messaging and branding.
The other changes include allowing participants to access up to two lump sum advances each year, up to a total of half the amount of the maximum annual rate of the pension. They have also introduced a guarantee that participants will not have to ever repay more than the market value of the property.
The PLS can help retirees take advantage of their largest asset, the family home, to help fund their lifestyle in retirement. We commend the Government for these changes.