Repayment of a PLS loan


A PLS loan is normally repaid either when the recipient:

  • chooses to repay it, or
  • sells the real assets, or
  • dies.

This topic explains these situations.

Repayment when person chooses

A person can choose to repay all or part of the debt and accrued interest at any time. The delegate has discretion to accept repayments by instalments, or by lump sums.

Example: A pensioner may repay a lump sum as a result of selling some livestock or due to a rearrangement of their financial circumstances.

Real assets sold

A person must establish that they have sufficient real assets (1.1.R.15) to secure and repay a loan under the PLS. Only real assets owned in Australia can be used as security for a loan under the PLS. When the real assets used as security for the loan is sold the PLS loan should be repaid.

The person may offer a new property as security for the PLS loan. Their participation in the PLS can continue as long as the substitute property's value is considered to provide adequate security for the debt and the substitute property is also in Australia.

Act reference: SSAct section 11A(1) Principal home

Policy reference: SS Guide 1.1.R.15 Real assets (PLS)

Death of recipient

When a PLS recipient dies, the debt under the scheme is recovered from their estate unless the recipient's surviving partner has the use of the assets or part of the assets that are subject to a charge.

Explanation: DHS usually enforces the charge on the real assets and commences recovery of the debt immediately, particularly where the recipient does not have a surviving partner.

Surviving partner

The following table explains the provisions where there is a surviving partner. Exceptions to these provisions are explained after the table.

If the surviving partner … then they …
chooses to repay the PLS loan can repay the loan debt at any time, by making repayments.
is qualified for payment under the PLS in their own right, and wishes to continue receiving payment continue in the scheme, and recovery of the debt is deferred until the death of the surviving partner.
is NOT qualified to receive payment under the scheme are required to repay the loan debt, but not before the end of the bereavement period. The debt is usually recovered from the recipient's estate.

Act reference: SSAct section 21(2) For the purposes of this Act, if a person dies …

Commonwealth entitlement to recover a PLS debt

There are some circumstances where the Commonwealth will generally not recover a PLS debt immediately after a person's death:

  • If a member of a couple dies and the partner is entitled to a bereavement payment. In this situation, the debt can only be recovered after the last bereavement payment payable.
  • If the surviving partner has use of all or part of the assets subject to the charge and has reached age pension age, the debt can be recovered only after the death of that person.

Use of assets includes:

  • living in the secured property
  • using the security property as a holiday home, or
  • using the rental proceeds from the secured investment property as income.

The applicable bereavement payment provisions will be those of the pension/allowance that the deceased person was receiving. If the recipient was a full loan recipient, neither the recipient's partner nor their estate is entitled to a bereavement payment.

The delegate has the discretion to delay or phase recovery, although this would not usually be exercised for single recipients.

The fundamental nature of a discretionary power is to provide discretion in the event of unusual or special circumstances. The discretionary power is exercised on a case by case basis having regard to all relevant circumstances. For this reason the discretionary power cannot be prescriptive.

The surviving partner who is under age pension age automatically receives the 14 week bereavement period as required by SSAct section 21(2).

Examples of situations where the delegate may exercise discretion include:

  • the surviving partner is incapacitated or hospitalised for a period extending beyond the 14 week bereavement period and is not in a reasonable position to arrange timely repayment of the PLS debt, or
  • the surviving partner is living in the secured property and loan repayment arrangements are being organised or negotiated.

There are complicated issues regarding the timely settlement of the deceased partner's estate and to enforce repayment of the PLS debt in the immediate period following the 14 week bereavement period would cause unreasonable financial stress on the surviving partner. Discretion would not be exercised where the surviving partner is of age pension age and has use of the secured property.

Act reference: SSAct section 1139 Debt not to be recovered until after death, section 23(5A) to section 23(5D) Pension age

Policy reference: SS Guide 3.1.5 Bereavement payment provisions, Security for PLS

Last reviewed: 1 July 2019