January 20th, 2022Pension Loans Scheme rebranded

The federal government is rebranding the Pension Loans Scheme to be known as the Home Equity Access Scheme and reducing the interest rate from 4.50 per cent to 3.95 per cent per annum.

The cut to the compound interest rate took effect from 1 January 2022, reducing borrowing costs for participants and allowing them to use the Scheme for longer.

Minister for Families and Social Services Anne Ruston said the move would give older Australians more confidence to tap into home equity to enhance their retirement living standards.

“The Morrison Government is committed to finding new and innovative ways to support older Australians in their retirement,” Minister Ruston said.

Senator for Victoria Sarah Henderson said home ownership is a bedrock of our society with many people working hard to accumulate wealth in the form of real estate equity.

“The Home Equity Access Scheme allows Australians over the Age Pension age – whether they are pensioners or self-funded retirees – to unlock this equity using a trusted Government product to boost their disposable income in retirement,” Senator Henderson said.

“We know that there are more than 28,200 people in Corangamite electorate, 28,190 in Corio electorate, 27,000 in Ballarat electorate and 28,400 in Bendigo electorate over the Age Pension age who may be able to access the Scheme.”

The Scheme allows older Australians to get a voluntary non-taxable fortnightly loan from the Government up to a maximum value of 150 per cent of the rate of the Age Pension.

To be eligible for the Home Equity Access Scheme, retirees must have reached Age Pension age, own real estate in Australia and meet residency and certain other requirements, but do not need to be receiving a pension payment.

The changes builds on a package of proposed improvements from 1 July 2022, introduced into Parliament earlier in December, to introduce a No Negative Equity Guarantee and allow users of the Scheme to access capped lump sum advance payments.

“The lower interest rate, together with the upcoming enhancements, will make the Scheme an attractive option for retirees,” Senator Henderson said.

“The new name also seeks to make sure that all retirees, not just those on a pension, know they can benefit from the Scheme if it suits their circumstances.”

For more information on the Scheme, go to the Services Australia website.