The Pension Loans Scheme and Aged Care Fees

Article published 27 June 2018

Subscribe to CPSA news


Did you know that if you use the Australian Government’s Pension Loans Scheme to supplement your retirement income your aged care may cost more?

The 2018 Budget announced changes to the Pension Loans Scheme. The scheme, which is effectively a government reverse mortgage, will be extended to anyone of Age Pension eligibility age. This means anyone receiving a part, full or no pension will be able to borrow up to 150% of the Age Pension a year against the value of their home.

Apart from the obvious down side – less money in your pocket after the sale of your home – this loan may have implications for the cost of aged care.

The payments received through the Pension Loans Scheme are included in your income for the purpose of means testing for home care and residential aged care.

The amount of income you can earn before you start contributing towards the cost of both home care and residential care is $26,660.40 a year for singles and $20,703.80 a year for couples.

Once your income exceeds the threshold your basic daily fee for aged care services goes up.

So if you participate in the Pension Loans Scheme and it bumps your income above these thresholds you may actually increase the price you pay for aged care.

There is however a limit on how much you can be charged. You cannot be charged more than $26,964.71 a year or $64,715.36 over a lifetime. After these limits are reached, you won’t be charged a means tested fee.

For more information about aged care fees call My Aged Care on 1800 200 422.

For more information please email our media contact at

Stay up to date with CPSA news and media releases

Our regular email newsletter provides valuable insights and information on topics such as pension entitlements, healthcare, government policies, and more.

  • This field is for validation purposes and should be left unchanged.