MEDIA RELEASE: PBO report confirms family home is the missing piece of pension puzzle

The PBO report Costing 2015 Pensioner Loans Scheme shows that options to boost pensioner living standards through equity release are seriously underutilised, says Centre for Independent Studies economist Simon Cowan

“Of the 1.8 million pensioners who own their home less than 1,000 participate in the pension loan scheme.  Some are ineligible, most probably don’t even know it exists,” Mr Cowan says.

“Asset rich and cash poor pensioners are struggling to make ends meet while government support is directed to those with million dollar homes.

“By linking reverse mortgages with reforms aimed at including the family home in the pension means test, the government can lift living standards and cut pension costs.”

Mr Cowan says a government backed reverse mortgage scheme, together with an expanded pension loan scheme and pension means test changes, could see 2.37 million pensioners gaining an average of nearly $6,000 in extra income each year.

“Under our scheme government pension savings would exceed $14 billion a year,” he says.

“The PBO report shows that the cost of administering an expanded reverse mortgage scheme could be lower than expected. We must start looking at options like these.”