Gladys Liu (Chisholm, Liberal Party) Share this | Hansard source

I rise to speak on the Social Services and Other Legislation Amendment (Pension Loans Scheme Enhancements) Bill 2021. Through this bill, the Morrison government is increasing the flexibility of the Pension Loans Scheme to give our senior Australians more choices in their retirement. Australians are living more than 10 years longer than they were 50 years ago. I'm sure I speak for all in this place when I say that we want our senior Australians to enjoy the best quality of life during their retirement. One of the key factors in achieving this is financial independence. The retirement income review highlighted that accessing a portion of a pensioner's home equity can greatly improve their living standards in retirement. This is particularly true for those senior Australians who hold a substantive asset but have limited income.

For many senior Australians, the age pension is a key source of retirement income, but with housing prices increasing significantly in recent years many senior Australians have become paper millionaires with limited ability to access the benefits of their appreciating assets. For example, since 2003, the median house price in Melbourne has grown from around $280,000 to approximately $937,000. This is where the Pension Loans Scheme comes into play, giving senior Australians another option for using their accumulated wealth to support their retirement lifestyle. Participation in the Pension Loans Scheme is voluntary, and the scheme is similar to a reverse mortgage product. Like home equity release products available in the private market, the scheme enables Australians of age pension age to voluntarily unlock the equity in their home. It provides senior Australians with the option of drawing a fortnightly loan amount, backed by the equity in their home or other real estate assets, to supplement their other retirement income. Through this scheme pensioners can top up their pension payment with loan payments up to a maximum of 150 per cent of the fortnightly rate of the age pension. Eligible nonpensioners, such as self-funded retirees, can receive the full 150 per cent of the fortnightly age pension rate in loan payments. This gives senior Australians the option of staying in their own home while boosting their retirement income. Importantly, participants in the scheme have complete discretion as to how they spend their money. In 2019, the Morrison government provided access to this scheme for all Australians of age pension age, including self-funded retirees and maximum rate pensioners. We also increased the amount available as a fortnightly loan. These changes have seen a fivefold increase in take-up over the last two years, and there are currently more than 5,000 participants in the scheme.

This bill will introduce two additional features to the Pension Loans Scheme to further increase flexibility and confidence in the scheme for those senior Australians who choose to use it. These measures will come into effect on 1 July 2022. Firstly, the introduction of a no negative equity guarantee will give participants confidence they will not repay more than the equity they have in the property used to secure their loan when settling their debt. This change will make the Pension Loans Scheme a more attractive option for senior Australians in their retirement. Secondly, participants in the Pension Loans Scheme will be able to access a portion of their payment as a lump sum advance. Life often throws surprises your way. This change reflects that reality, giving retirees greater flexibility and a new mechanism to help them meet unexpected or substantial expenses.

Homeownership has been seen as the bedrock of our society. For many Australians, a place to call your own is a crucial part of what has been called the Australian dream. This bill is all about giving our senior Australians more choice and control of their retirement lifestyle. We want to give all Australians the confidence to tap into a small portion of their home equity to increase their retirement outcomes. It is estimated that around 80 per cent of senior Australians over the age of 65 are homeowners. The changes introduced with this bill will give those Australians more freedom to enjoy their retirement. It will help them to stay in their own homes throughout their golden years where they can continue to create cherished memories with friends and family. We want our senior Australians to enjoy greater choice, financial independence and quality of life in their retirement years, and so I gladly commend this bill to the house.

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