We already have retirement village investment. We have $100 million in a retirement village group that has an alignment of interest with its operator. That only started in January this year so we haven’t got much off the ground there. Whereas the campus living is about $150 million and it was invested about 18 months ago.

Amanda White: Michael Rice, where do you think product development in this area is moving?

Michael: We’re an unusual country because we don’t have compulsory retirement benefits. And in fact it’s even more flexible with the Better Super changes, they can almost spend their money straight away when they’re 60 if they want to.

The difficulty that the average retiree has is that they don’t know how long they’re going to live. They don’t know how healthy they will be and for how long. They’ve got this sense that they may as a cohort live longer, but individuals don’t know that.

I think one of the difficulties at the moment is making people pay for things in an uncertain world. Trying to tell them to pay $100,000 for somewhere when they don’t know how long they’re going to live, is a big cost for individuals. The other problem is the way means testing on the aged pension works. Because the family home’s quarantined, people don’t want to leave it and downsize because that frees up capital which then comes into the asset test. So you get behaviour distorted by the rules.

And it would be nice if we could pool things. If you think of the way an industry fund works with pooled investments – you have huge masses of capital and people having their money looked after soundly because they don’t have to make a decision. But when they retire they’re left to make their own decision about very complex issues. Now I don’t think annuitisation will come back quickly because life companies don’t want to sell annuities.

In fact all of them that have them are selling them to Challenger at the moment. And I think AMP and Challenger are the only two still offering lifetime annuities. And it’s because the rules of investment are such that the life company almost has to invest in fixed interest investments to back those products which makes them unattractive as a long term investment.

Walter Secord: Aged care is not something that most people think about at all. Most people who move into an aged care facility make that decision between a five to seven day period. You have a major crisis in your life. Your partner dies or you fall and you break your hip or you suddenly become ill. Then you make a decision to move into aged care.

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