Why you need to check on your Retirement Village Contract
On October 1st ABC’s 7.30 Report focused on Retirement villages accused of gouging older Australians in 'corporatised elder abuse' and investigated the financial risk faced by more than 250,000 Australians living in retirement villages.
This story comes at a time of heightened concern over increasing aged care costs as part of the Federal Government's new Aged Care Bill, which promises funding to a broken system, paid for by residents.
In NSW, reforms that came in 2021 include the right to an annual contract check-up, which is a crucial tool for retirement village residents.
This check-up allows residents to reassess and re-calibrate their financial standing in light of potential changes, such as new aged care rules or their evolving personal financial situation.
The check-up helps ensure that residents remain aware of the terms of their contract and can make informed decisions, particularly when considering the financial implications of leaving a village. It is especially valuable for those who may have lost track of the details of their original deal.
More than 60% of village residents move directly to aged care, and a growing part of our service is attending these meetings with residents and helping them understand the new aged care cost regime.
Below is a high-level summary of the article:
1. High Exit Fees:
Retirement villages charge substantial exit fees when residents leave or pass away. These fees can be up to 60% of the property’s value, significantly reducing the amount residents or their families receive.
2. Refurbishment Costs:
Many residents are required to cover expensive refurbishment costs, even if the property is in good condition. These fees can sometimes be inflated, leading to financial hardship.
3. Lack of Regulatory Oversight:
The retirement village sector has minimal regulation, and some describe it as “cunningly designed rip-offs.” The complexity and lack of transparency in contracts leave many residents financially worse off when they exit the village.
4. Unfair Contracts:
Many residents and their families feel trapped by contracts that they do not fully understand. These contracts can involve hidden fees and responsibilities, which only become clear when residents try to leave.
5. Impact on Financial Well-Being:
Some residents lose significant amounts of their life savings. The article highlights cases where residents walked away with far less than they paid, putting them in a precarious financial position, especially if they need aged care.
6. Lack of Political Action:
Despite past inquiries and recommendations for stronger consumer protections, very few reforms have been implemented. Calls for national regulation and harmonisation of state-based rules have largely been ignored.
7. Calls for Reform:
Advocates like MP Rebekha Sharkie are pushing for retirement villages to be regulated as financial products, which would bring greater oversight and protections for residents.