Changes to pension and aged care rules pose threat for Adelaide retirees

It is now clear that modifications to the rules governing pensions and age care have just one thing to say to the public: find alternative means to finance your retirement. These latest changes to pension and aged care rules pose a new threat to Adelaide retirees – as if they needed any more!

The Abbott-Turnbull governments’ introduced programs and initiatives may not appear that substantial.  However, if one looks at the bigger picture, it’s easy to see huge cuts to government funding for older Australians.

Alterations to means-testing for the aged pension, eligibility for the Commonwealth Seniors Health Card (CSHC) and the management of the account-based pension, are all aimed at reducing public funds for retirees.

Natasha Panagis, technical specialist at advice business Strategy Steps said, “The government is pushing retirees to use their own capital to fund their retirement.”

The biggest and most contentious reduction in subsidies for senior Australians are the stricter rules around means-testing for the age pension and the level to which pension payments can be influenced by additional savings.  These two measures were introduced in the May budget and approved by parliament.

In the new Turnbull administration, the following changes will take effect in January 2017:

  • The threshold for a part pension for couples who own their home will be reduced from $1.1 million to $820,000;
  • The threshold for a part pension for single or unmarried homeowners will be reduced from $775,000 to $ 547,000.

Thus, the government has declared that an estimated 91,000 people will no longer be qualified for the part pension and an additional 235,000 people will have their pension payments reduced.

Furthermore, for every $1000 in savings a retiree is set to lose $3 in $1.50. In all measures combined the government is projected to save $2.4 billion to 2019.

All this means that the capacity of many middle-income earners to retain their current level of pension will be greatly diminished.  In order to qualify for the full pension, the value of assets retirees can own on top of the family home is expected to go up from $286,500 to $375,000.  In addition, rental income from property will no longer be exempt from means-testing for any age care payment.

Strategy Steps, in a memorandum to their clients, warned “Clients who move into care after 31 December 2015 may find it more difficult to fund their retirement if they have limited financial resources and wish to keep the family home. Financial advice around aged care funding and cash-flow management will become more critical for these families.”

The burden to senior Australians does not end there.

Starting this month, in January 2016, non-taxable superannuation income was added to the means-test for the CSHC, making it harder for older Australians to qualify for the card. The Seniors Health Card gives discounts on prescription medicines, concessional rail travel on certain lines and, depending on the state, additional health, education and recreation allowances.

In a step aimed at keeping workers in employment for longer, the age at which people can access their super savings went from 55 to 56 in July 2015 – something that is expected to rise further in coming years.

On a more positive note, the government rejected a recommendation by the David Murray Financial System Inquiry to prohibit borrowing by self-managed super funds in order to buy shares and property.

In a bonus for individuals who unwittingly put too much money into the super, starting 2015 people who surpass their annual after-tax contributions limit may choose to have the contributions and associated earnings released from their super accounts.  These excess contributions no longer attract tax at the top marginal tax rate.  However, the associated earnings will be taxed at the marginal tax rate on top of the Medicare levy.

Home equity

Super to Fund Aged Care Costs Through Home Equity?

The Association of Superannuation Funds (ASFA) is looking for ways to help its members prepare better for aged care, and according to its chief executive this may result in new home equity schemes to fund nursing home costs. 

In her address to the ASFA conference recently, Pauline Vamos noted that the government would soon experience a heavier fiscal load due to the ageing population and when this happens, seniors would be pressured to fund health and aged care costs on their own. Consequently, the association is calling its superannuation fund members to improve their planning and preparation for retirement, and the development of new financial products to fund aged care through home equity is one of the measures the association suggests.

Ms Pauline Vamos made a forecast that by 2055 aged care costs would represent an annual hit to the federal budget of $220 billion. According to a paper prepared by Ms Vamos, this would likely result in funding cuts to the sector.

The ASFA paper explores the possibility of innovating super funds by developing financial products that tap into real estate in order to release housing equity. The paper suggested mechanisms such as downsizing, equity release products, or contingent loans could be used for aged care costs.

For most retirees the home is their greatest asset. In a political environment of growing pressure on the federal budget and mounting debate regarding the fairness of government providing aged pension to wealthy home owners, the family home is increasingly being regarded as a source of funding for retirement

In 2055 when the local 30 year-olds of today are retiring in Adelaide, federal government expenditure on aged care is projected to reach $290 billion. Even if the government decides not to cut health and aged care funding, the higher volumes of seniors will inevitably mean that more people will need to find ways to fund aged care for themselves.

According to AFSA, in 2008 a woman aged 65 years had a 54% chance of needing residential aged care and men on the other hand stood a 37% chance of requiring full-time aged care (men have shorter life expectancy). Seven years later, the average woman is now facing an ‘odds-on chance’ that she will soon need to enter a residential aged care that she can barely afford.

Ross Clare, director of policy of ASFA, said that people today are more likely to have the need for aged care services because of increased life expectancy. And as people live longer, there is a higher chance that they would need greater level and quality of care, especially those who have ailments such as dementia.

It seems that perhaps more than ever, Adelaide residents need better access to financial products and services to help them navigate aged care successfully. Equity release products such as reverse mortgage should be explored by individuals as a legitimate option, but good financial advice and that plans for the future may still be the best preparation for seniors who want quality of life in their retirement years.

Regards, Carmela

5 Reasons Why Men Resist Adelaide Aged Care Services


Older men continue to access home care services far less than women.

New data from the Australian Institute of Health and Welfare (AIHW) shows that older women are much more likely to use home care services compared to men, making up 2 out of 3 consumers. The same report also reveals that women are also the predominant users of home care services across all package levels and ages. This gender gap is also true in residential aged and elderly services in SA and Adelaide.

Advocates for men’s health encourage care providers to address the barriers older men experience in using assisted services.  In June, Community Care Review reported on low use of aged care services among men and the need to revisit service strategies to reach them out.

But why do older men are generally disinterested in seeking help? Read on to find out.

Five Reasons Why Older Men Resist Adelaide Aged Care Services 

Exploring certain obstacles that older men experience in accessing aged care services will help you understand the gender gap. Accessing elderly care services is vital in living longer and living better, which is recommended for all regardless of gender.

Adelaide Aged Care Financial Advisers delve into the top reasons why older men refuse aged care services.

1. “Home care is too feminine.”

Older men usually value outdoor activities more than the idea of relaxing at home. This generation of men consider home care services as a domain of women, so they think that if they avail of such service, they will become less manly. This misconception could be loosely attributed to the imagery and language used by care providers in their promotional materials, where the pictures used are mostly of older women. Hence, older men think the services are not for them, particularly at community services that are often framed around activities that in the past were completely associated with women such as domestic care and chatting with friends over tea.

2. “I don’t want to rely on charity.”

Relying on charity is a taboo for most blokes instilled during their childhood. Even though aged care system is a component program of the Department of Social Services to help senior Adelaide citizens, some elderly think of it as charitable work and most men are simply not into it.

3. I’m not weak. I can live without help.”

Most aged care providers in Adelaide promote their services to assist the elderly to maintain their independence at home. But older men see this as a flawed proposition. They often ask, “how could I be independent, if I would ask help?” This contradiction is at the core of most care providers, because they are talking about the values of independence, yet they are highlighting assisted care. Even in advertisements, brochures, and catalogues, most men are depicted as weak recipients of care. This is a common barrier for older men, who likes to think that they are strong and assisted service is not relevant for them.

4. “I don’t want to be a burden to anyone.”

The older generation of men value their self-reliance and independence. Many of them worked for decades to provide and take care of their wives and children. And now that they are retired, most of them feel depressed thinking that as they age, they will become a burden to their families. Much as they don’t want help from their family or friends, they also resist domestic assistance even from professional carers. It’s often difficult for men to keep their sense of dignity when they need help in bathing or getting dressed.

5. “I wasn’t aware of Adelaide aged care services available for me.”

There are cases that older men were not able to seek aged care services because they were simply not aware of the available services for them. This is fairly common for older men with different social, educational, and linguistic background.

How to Bridge the Gender Gap

Encouraging older men to access elderly care services in South Australia takes a concerted effort of all stakeholders – the Australian government, the care providers, the families, and of course the beneficiaries.

Probably, you have been reading this because you are thinking of availing aged care services, yet you are experiencing some barriers described above. It’s perfectly fine to take hold of your old values. Your family and friends, in fact, admire you for that. But seeking help will not make you less manly, but will help you enjoy your life after working hard for years. With aged care system, you can avoid the stress and difficulties of retirement, and enjoy your senior years.

Families and friends should always encourage their loved ones to access these services. They can assist them in learning more about aged care services in Adelaide, and help them choose the most suitable type of service for them.

For its part, the Government of Australia has already rolled out the Consumer Directed Care (CDC) as basis for care providers in delivering their services. With the CDC, you can have more say to the structure and manner of the services you receive. In theory, this initiative can improve the uptake of services among older men, but of course it will still depend on how the system is actually implemented. (Also read our in-depth blog post about CDC)

Meanwhile, the official website of Australia’s Aged Care System can be accessed in other languages including Arabic, German, Italian, Spanish, Korean, Chinese, and many more. It also coordinates with the Department of Immigration and Border Protection for Translating and Interpreting Service.

Aside from complying with the principles of CDC, care providers must also be innovative in their language and imagery to increase the perceived relevancy of the services among older men. They should also offer services that are suitable for men and will not compromise their value for independence and self-reliance.

If you think you need help in understanding how your aged service is funded and how to manage your funds, please feel free to contact Adelaide Age Care Financial Advisers on 1300 422 232 for a confidential chat.




Aged care means-test to force SA home sales, reverse mortgage?

There was some big news for Adelaide seniors in the recent Federal budget: starting next year, a new rule in aged care means testing is expected to force an increase in house sales and reverse mortgage applications amongst Adelaide pensioners and retirees.

Beginning January 1, rental income will no longer be excluded in the calculation of means testing.  The current rules allow residents to enjoy their rental income and use it directly to pay for aged care fees. Many aged care financial experts believe that this tightening on the mean testing will give pensioners limited options to be able afford aged care fees.

If you are due to enter residential aged care before the year ends (and assuming the new legislation passes in the senate), you are lucky because you will enjoy the current rule which provides a rental income exemption from means testing. If you go into a nursing home after January 1, you can expect that the new rule may drastically affect your cash position or even worse, force you to sell your family home or take out a reverse mortgage.

You are probably wondering how exactly does this change affect you? Well, let’s say you are a full pensioner that receives $22,365 worth of pension a year and has $60,000 savings in the bank. You are receiving $18,000 rental income a year and this is what you use to pay for daily accommodation payment. Under the current rule, your daily care fees will be around $17,936 per year. On the other hand, it will increase to around $25,491 a year if you calculate your daily care fees based on the new rule.

Selling your home or taking out a reverse mortgage may be a more viable option because it could give you significant budget savings. But of course, as much as possible, people often want to have the choice of keeping their family home when they make the move to residential aged care. Having the freedom to choose from a range of other options is important.  The announcement about the change in means-testing is quite disappointing. There are many aged care activists now who are questioning whether this is good policy.

The Social Security Act 1991 allows residents of aged care to rent out their home and use their rental income to pay for aged care fees. Effectively, this source of income has been exempted in the calculation of the means-tested care fee for years. But beginning next year, the new rule is set to change the way incoming residents deal with their family home.

The recent announcement came as a surprise as we expect Living Longer Living Better reforms to protect Australians and support them to hold onto the family home if they wish to. This change, however, makes us more vigilant in educating families who are about to avail themselves of aged care services. Knowing and understanding your financial options will avoid costly mistakes and will save you a lot of money.

Is your home worth keeping? Do you want to rent it out? Would reverse mortgage be enough to cover aged care fees?

We will be glad to answer your questions and sit down with you. For a free initial consultation, please call Adelaide Aged Care Financial Advisers at 1300 422 232.

Regards, Carmela


Adelaide Elderly To Pay More For ‘Home Care Packages’?

Around 72,000 people under Home Care Packages (HCP) in Australia will experience change in the way they receive their benefits come July 1st. A new program called Consumer Direct Care (CDC) will replace the current government funded stay-at-home care schemes for the elderly. Many Adelaide pensioners and seniors will be affected by the transition. As early as now, there are debates about whether this will make them better off or not. Are the Adelaide Elderly To Pay More For ‘Home Care Packages’?

The new scheme will allow recipients more control and options on their care packages. Under CDC, the recipients will be told how much their package is worth and it’s up to them to negotiate to their care providers for the type of service that they want.

There are some care providers who are already transitioning to CDC. Although the government has guaranteed that no one will be worse off under the scheme, some still have doubts whether this move will be good or bad for the finances and cash-flow of the elderly. Those who have experienced the transition have mixed reviews about this.

Generally, CDC is good because it gives you options and a lot of seniors feel a ‘personal involvement’ in getting aged care service. One can now arrange the timing of care with a provider and schedule it in a way that is most convenient for them and their family. If for example your wife will be out for a couple of days, you can bank hours by minimising the hours a week before and then ask the care provider to render more hours while your wife is away. The CDC scheme allows flexibility and the ability to discuss issues with the care provider and come up with solutions that are beneficial for the recipient.

On the other hand, the problem arises when it comes to the financial side. Admittedly, the government funding seems insufficient and groups like Combined Pensioners and Superannuants Association (CPSA) believes that CDC has missed out one major concern:  cross-subsidisation. In effect, those with lesser needs will have to ‘subsidise’ those who are in need of more intensive care.

This July, the funding will go directly to the recipients and it’s up to them how they will use it. There are some who complain that they are losing out on CDC. For instance, a 99-year old mother who recently transitioned to CDC can only afford 9.5 hours worth of home care, as opposed to the previous 19.5 hours she was getting under HCP. This 10-hour reduction will cost her and her family $1,500 a week and $78,000 a year if they want the same level of care the HCP gives.

For now, that family is left with no choice under the new scheme. Are they better off? Certainly not. Now they have to pull out their resources just to meet their mother’s aged care requirements. The daughter said that perhaps it’s time to sell some furniture.

If you are in Adelaide or SA and you think you need some advice about your aged care, please feel free to call Adelaide Aged Care Financial Advisers on 1300 422 232.

Regards, Carmela


Robots In Nursing Homes: Coming To Adelaide Aged Care?

In this day and age, the possibility of employing robots is not far from reality, especially with Australia’s growing ageing population. In Japan, several robots like Toyota Human Support Robot and HAL body suit are already available and expected to increase production to assist in rapidly ageing Japan. Cyberdane’s Hybrid Assistive Limb or HAL is an exoskeleton-type robot suit that when worn, can increase someone’s ability up to ten times.

In an interview with Australian Ageing Agenda, Professor Wendy Moyle, director of the Centre for Health Practice Innovation at Griffith University, “For me, one of the most important or key things is about having the right robot for the right purpose.” This is true because there are many types of robots that can assist older people. For example, there are robots built to carry them, serve them food, or do laundry. Some are social robots that offer company for lonely aged individuals.  Although Prof Moyle support robots in aged care, she said that no social robot could still replace human activity and companionship.

Unlike Japan who are very vocal in their efforts and beliefs that in the future robots can work instead of human beings,  there has been lots of resistance and fear of robots taking over in aged care in Australia to date. Experts believe that Australians will be more open now in the use of robots. Prof Moyle explains, “I think the people that think we shouldn’t have robot need to actually, I guess open up, and think they are around. They actually are here. They are here in everybody’s homes, whether they like it or not. So they’re in their cars or they are in their television or vacuum cleaners, etc.”

Hitoshi Fukomoto, executive director of Kinoshita Care, believes that robots could deliver a higher standard of care than poorly skilled care workers. In a Sydney forum, Mr. Fukomoto said that, “While robots cannot exceed the best quality care workers, they are a lot more efficient and deliver better care than the workers with no or poor skills.” In 2012, Kinoshita Care started to use social robots in its 142 facilities. Recently, they purchased 40 robot power suits that enable care workers to carry and lift bed-ridden residents.

The fear of robots taking over in aged care industry is not necessarily true. For example, the HAL body suit still employs humans and just improves their skills. It can also help those who have problems walking or have a hard time moving around. Essentially, as long as they’re cost-effective and can provide better care, everyone can highly benefit from the use of robots.

It seems only a matter of time until robots become commonplace in nursing homes, and when it happens it will change the experience of ageing forever.  Do you think the Adelaide aged care industry and their residents will welcome robots into our daily lives?

Regards, Ben

rising aged care costs 2014

Living Longer, NOT Living Better: Aged Care Act Hits Adelaide

Last 1 July, 2014, the Living Better, Living Longer reforms became law. This has brought extensive changes to the aged care system in Adelaide and South Australia, and potentially has a huge impact on the finances of aged care residents and their families.

While the objective of these changes is to have a sustainable and more efficient aged care system in the long term, many Adelaide people fear that this will make accommodation costs rise. If that were the case, people will be living longer, but not living better. On the other hand, this new legislation addresses key challenges that the South Australian aged care system is facing now:


  1. Rapid increase in ageing population. In the next 20-30 years, a huge number of baby boomers will retire and many  will need proper aged care services. This will be a major shock for the national aged care system since every year, 200,000 of these baby boomers are expected to crowd the nursing homes.
  2. Living longer. Aside from the increasing number of ageing population, people have increased longevity too. This means that seniors will stay longer in aged care facilities and will need more care.
  3. Limited aged care facility. With demand expected to rise, accommodation supply will get tighter. The limited number of aged care beds available may not be enough for the growing number of people needing aged care.
  4. Many will prefer home care. During this shift going on in the aged care system, many baby boomers are expected to demand home care for as long as they possibly can.
  5. A decline in tax revenues. Since government expenditure on aged care is already significant, an increase in population needing aged care will put a strain on already tight government funding. In addition, as the working population reduces, less people will contribute to government tax revenue.

If you or your family member need aged care in the coming months, the team at Adelaide Aged Care Financial Advisers have developed a list of how this new law might affect you:

  • There is now an annual cap of $25,000 and a lifetime cap of $60,000 to means-tested care fee.
  • The low care, high care, and extra services are now abolished. There is only one level of aged care service today.
  • Residents are expected to pay more in most cases now that there is an increased means-testing. There is now what we call Means Tested Care Fee, which is payable based on the income and assets of the resident. This fee shall only cover expenses and care, and not accommodation.
  • Entry-fees as a lump sump are now payable for all residential aged care. This is called Refundable Accommodation Deposit or RAD. This is the accommodation bond you pay the facility upon entry and refundable after you leave the nursing home. You can also pay it in the form of Daily Accommodation Payment or DAP.
  • Each resident should pay a Basic Daily Fee of $46.50 at present.

Although these fees can be complex and confusing, a good aged care financial adviser can help you in planning your finances. Adelaide Aged Care Financial Advisers specialise in aged care and can help you make the most of your finances to successfully fund your aged care fees. Call us today for a FREE initial consultation on 1300 422 232.

Regards, Ben