The federal government has announced several changes to the existing Pension Loans Scheme, including a rebrand to encourage greater take up of the facility among retirees.
The initiative will now be known as the Home Equity Access Scheme and will be made available to all property owners who have reached pension age.
In addition, the government has reduced the applicable annual interest rate from 4.5 per cent to 3.95 per cent.
“We’ve had a pension loan scheme for some time, but this is making it even more attractive by reducing the interest rate. And what it means is that – and it’s not just pensioners, it’s pension age, so self-funded retirees, others, you don’t have to be on the pension to access this – but this enables them to draw on the equity in their own home through a government scheme,” Prime Minister Scott Morrison said.
Morrison noted the move should also ease worries retirees have over using reverse mortgage products available in the market.
“I know many pensioners in particular, as I was treasurer when we first started opening up this scheme and making it more attractive, are concerned about going into reverse mortgages with banks and those sorts of things. I understand those concerns,” he noted.
“There [are] some good products there, but what this does is provides another what would be considered a safe alternative for them to be able to access the equity in their own home to improve their incomes and their living standards in their retirement years.
“It just gives them another tool to be able to have a better quality of life in their retirement and using that equity in their own home to be able to achieve. Now, it’s a choice. It’s an option for them and it’s there to give people that opportunity.”
The Pension Loans Scheme gives retirees access to a voluntary non-taxable fortnightly loan from the government using the property they own to secure the borrowing.''