The Pension Loans Scheme (PLS) is the Australian government's 'reverse mortgage' scheme administered via Centrelink and DVA. Changes to the PLS introduced on 1 July 2019 made the PLS accessible to significantly more seniors, many of whom are struggling to make ends meet financially. Since 2019, participants in the Scheme have increased 470% with significant future growth anticipated due to the Federal Budget 2021 enhancements which commence July 2022.

Currently, the responsible Minister (Senator Anne Ruston, the Minister for Families and Social Services Australia) sets the PLS interest rate which is a variable rate. The PLS rate has only been adjusted once in over two decades.

Whilst competitive with commercial reverse mortgage rates, the PLS rate was not adjusted as a consequence of the COVID19 emergency reductions to the RBA's Official Cash Rate during 2020 to a record low of 0.10%. Whereas, commercial providers adjusted their rates.

Seniors participating or considering participating in the PLS deserve a fairer and more transparent rate-setting mechanism given the impact the PLS interest rate has on the net equity in their homes.

For further information, refer our blog Why the interest rate needs to be fairer for seniors