Monday, 24 September 2018

Aged Care Royal Commission


The Aged Care Royal Commission and -

  1. The need for the royal commission to examine the negative impact retirement villages have on the capital base of Australian retirees and their subsequent reduced ability to fund or contribute to their own residential aged care costs
  2. With home care packages enabling a growing number of older Australians to stay longer in retirement villages, the need for the royal commission to examine whether the current jumble of state government laws will be appropriate for retirement villages into the future.

Retirement Villages Quasi Aged Care - With home care packages retirement villages are becoming quasi aged care. They must be part of the Aged Care Royal Commission as the negative financial impact on retirees living in retirement villages means they can require greater residential aged care funding when the time comes for that higher level of care.

Retirees can sell their only major asset the family home and pay an in-going amount to enter a retirement village often commensurate with a purchase cost, but granted only a conditional lease / licence to occupy. They then pay monthly maintenance fees, administration fees, selling costs on departure, a Deferred Management Fee often 35 % to 45% of the in-going amount paid, often they have little or no access to any capital gain, they suffer a devaluation of the refundable amount (the In-going Amount Paid minus the Deferred Management Fee) by CPI in each year of occupancy. All this on a property they do not own but simply have a conditional right to occupy. Vastly more financially punitive than under a standard residential tenancy agreement.



The table above shows the financial impact where a retiree stays in the family home or downsizes but maintains financial independence and some financial certainty by retaining property ownership. Their greater capacity to fund or make a contribution to their own residential aged care costs can be dramatic. The table also shows that other retirees can have a reduced capacity to fund their own residential aged care costs and will look to the taxpayer to fund any shortfall. This of course places an ever increasing strain on the commonwealth budget.

Retirement Villages are acknowledged as good social environments in which to live but they can come at a huge capital cost to the retiree, increasing their need for greater residential aged care funding from the taxpayer.




Federal Laws For Retirement Villages - Another critical matter is whether retirement villages should continue under a jumble of state laws or come under federal law.

The retirement industry direction for residential Aged Care and Retirement Villages is a closer relationship and where possible a joint facility where the operator is a registered care provider, providing in home care to the residents of the retirement village section through home care packages.

This will lead to an increasing number of aged Australians spending a longer period in retirement villages and potentially a shorter period in residential aged care, receiving commonwealth funding for in home care in retirement villages that operate under this jumble of various state government legislation.

Professor Tim Kyng from Macquaire University and Paul Latimer from the Swinburne Law School have both made persuasive arguments for retirement villages to come under federal law.





Their material outlines the many reasons why retirement villages should be under federal laws and well beyond the simple principals expressed here. It is essential the Aged Care Royal Commission look into retirement villages and the need for inclusion under commonwealth laws..

Summary - The record for state government reforms and better protections for residents of retirement villages has not been a good one. Simply maintaining the status quo will confine many older Australians to living in retirement villages as quasi aged care. Seeing them reside under a jumble of state government legislation, subject to increasing reductions in their capital base and generating an ever reducing capacity to contribute to or fund their own residential aged care costs.





How Retirement Villages Really Work



Saturday, 22 September 2018

Negative Impact Of Retirement Villages On Aged Care Funding

With home care packages retirement villages are becoming quasi aged care. They must be part of the Aged Care Royal Commission, the financial impact on retirees of retirement villages means they can require more aged care funding when the time comes.

Retirees often sell their only major asset, the family home. They then pay an in-going amount often commensurate with a purchase cost but are granted only a conditional lease / licence to occupy. Then pay maintenance fees, administration fees, selling costs on departure, a Deferred Management Fee often 35 % to 45% of the in-going amount, little or no access to any capital gain plus the refundable amount repayable on departure is devalued by CPI in  each year of occupancy. All on a property they do not own, only occupy.

When the time comes to move to an aged care facility the vale of their capital base is so diminished they have to go back to the Federal Government for greater assistance with their aged costs than might otherwise be had they chosen a different path than a retirement village.

Retirement Villages are acknowledged as good social environments in which to live, but they can come at a huge capital cost to the retiree and subsequently increasing the cost of aged care funding on the taxpayer.



Federal Laws Needed for Retirement Villages

There are many reasons why the Royal Commission into Aged Care should include Retirement Villages. One critical matter is whether retirement villages should continue under a jumble of state laws or come under federal law.

The industry direction for residential Aged Care and Retirement Villages is a closer relationship and where possible a joint facility where the operator is a registered care provider, providing in home care to the residents of the retirement village section.

This leads to aged Australians spending a longer period in a retirement village and a shorter period in residential aged care. Critically this will mean older Australians will spend most of their latter years under State Government legislation rather than Commonwealth legislation.

Professor Tim Kyng from Macquaire University and Paul Latimer from the Swinburne Law School have both made persuasive arguments for retirement villages to come under federal law.

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3030570 -

https://www.parliament.vic.gov.au/images/stories/committees/SCLSI/Retirement_Housing/FINAL-SCLSI-RHS-16112016-MU.pdf

https://www.parliament.vic.gov.au/images/stories/committees/SCLSI/Retirement_Housing/RH-Presentation-16112016-MU.pdf

The proposed Royal Commission should at a minimum look into whether retirement villages, for the reasons outlined in the material above, should come under Commonwealth law.


Friday, 21 September 2018

Retirement Ombudsman For NSW?

Age Calls For Retirement Villages Into Royal Ccommission

Family Home Financially Better Than Retirement Village

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