The release of the Federal Government's latest Intergenerational Report (IGR4) has highlighted the need for changes to pension rules that would help seniors unlock the equity in their own home, according to the Property Council of Australia (PCA)IGR4 predicted that by 2055 Australia will have a population of 40 million, up from 23.7 million today. An estimated 40,000 of those will be over 100, and 7 million will be over 70, representing a major shift in Australia’s demographic landscape.
The PCA's Retirement Living Council believes IGR4's findings underscore the urgent need for taxation and planning reform to help ensure the supply of new housing, investment in new infrastructure and better management of Australia’s cities are tackled in order to meet the demands of a growing population.
The ageing of the population puts particular emphasis on the need to bring on supply of additional retirement living, which will also relieve government budgetary pressures.
A new analysis by Grant Thornton for the Retirement Living Council found that the 184,000 older Australians currently living in retirement villages save the Federal budget $2.16 billion through delayed entry to aged care and reduced public health care expenditure. By 2025 this figure will likely double to 382,000 and continue to rise year by year.
In response to the demographic and budgetary challenges this will present for the government, the Retirement Living Council is advocating a tightly targeted change to aged pension rules to remove the existing penalty for pensioners wanting to downsize.
The Retirement Living Council has developed the 'unlocking home equity for seniors' proposal which would, on indicative estimates calculated by PwC, save the government $86 million per annum where those people choose to move to a retirement community.
Executive Director – Retirement, Mary Wood said: “This is a very simple, easily implementable policy solution to one of the biggest problems facing government.
“It affords older Australians a real choice about where they want to live during their retirement and allows them to be far more self-sufficient.
“The benefits of this policy will also be felt in Australia’s property market – particularly in hot spots such as Sydney – where more large, family homes will become available for families and first home buyers as older Australians take up the opportunity to downsize.”
Read more on the Retirement Living Council’s proposal and download a copy of the report here