Guy McAliece: I suspect that’s the transition the industry is moving towards. We’re looking at a number of operators who are moving from just retirement villages to having both packages. Deirdre Ashe: We just recently built a beautiful five star accommodation at Bass Hill, a low socioeconomic area. And on that site there was independent living units and a low care facility. At the opening of our high care facility, one of the resident representatives said how much the residents appreciated the fact that the rest of their life was secure in this community that they knew. Couples no longer had to be separated – one person could stay in the independent living area and another person could be in either the low or high care.

Michael Bailey: How can the model be improved from both an investors’ and a residents’ perspective?

Guy McAliece: We’d like to see the work test removed between the ages of 65 and 70 for contributions to super. So if the person’s in the situation where they’re selling the home, having a little bit of excess equity which sometimes occurs and they need to draw down a pension from the super fund as well as purchasing a place in a retirement village, they’ve got that opportunity.

Scott Marinchek: For most operators there’s only a cash purchase available as an option. An incoming couple will have to sell their home to put cash into buying what is essentially a loan/lease agreement. And after a certain period of time, the operator’s entitled to, on turnover, a proportion say around 40 per cent of that. To that extent the operator does not want community care delivered, because they do not want to extend the stay of their residents.

If they had on-site residential care available, it’s almost always the case that one of a couple would enter it first, and that creates a serious cash flow issue for the operator. In addition to that, because of the traditional way these particular commercial operations structure home ownership, that is a loan/lease agreement, banks do not lend money. Therefore individuals cannot borrow nor can they get a home reverse mortgage funding product available to tap into the equity in their independent living units. And from our perspective that creates some serious challenges.

Sam Sicilia: At some point in the future you’ll have people that are going through the superannuation system and their entire life has been in the fund. And all we’re advocating is that sooner or later it will be closer to cradle to grave than what it is at the moment. At the moment it’s kind of like 80 per cent cradle to grave. If you expect to live 30 or 40 years beyond retirement, why wouldn’t you want to be invested in the same way as you were 30 years earlier.

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