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Boosting retirement incomes the easy way: extending the Pension Loan Scheme to all retirees

17 Sep 2014

This paper suggests a modification to the Pension Loan Scheme intended to help boost the retirement incomes of a large number of current retirees.


The Australian government is currently willing to boost the retirement incomes of wealthy Australians by providing low cost ‘reverse mortgages’ through Centrelink. The Pension Loan Scheme (PLS) allows eligible Australians to receive payments equivalent to the full age pension paid into their bank account on a fortnightly basis, borrowed from the government and secured against the value of property owned by the recipient. These government-issued loans allow wealthy older Australians to boost their own incomes by converting equity in their home into a fortnightly flow of cash from the government.

Remarkably, to qualify for the PLS you must be too wealthy to be eligible for the full age pension. Retirees who are on the full age pension and who own their own homes are unable to boost their income via the PLS.

This paper suggests a simple modification to the PLS that would, in making it fairer, significantly help to boost the retirement incomes of a large number of current retirees. We propose that the PLS payments be made available to all citizens of pension age. 

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