It now seems possible that the federal government may eventually participate in a senior’s equity release finance scheme.
On Friday, the Productivity Commission released a draft report into the ailing aged care sector, Caring for Older Australians. The report proposed many long-overdue reforms. They include:
- making accommodation bonds available as a payment option across all types of care (not just low, extra service as it is now)
- including the family home as an assessable asset (for the purposes of aged care)
- the creation of a government-sponsored equity release or reverse mortgage scheme, to help fund aged care costs more often without having to sell the family home
The notion of including the family home in the assets test for aged care assessment will be contentious and probably strongly resisted by senior groups, however a government-sponsored equity release scheme is a deeply necessary reform if the aged care system is to have any hope of coping with projected future demand. According to the report, the ageing Australian population will see a four-fold increase in the number of aged care residents over the next forty years.
Although the report is just a draft, and any government action is probably some years off, most industry providers agree these ideas are a strong step in the right direction. If the government does eventually sponsor an equity release finance scheme for aged care, it could also be applied to retirees more generally, providing wider benefits for other seniors who seek to release equity without selling the family home.