Call for pension asset test relief for retirement villages and seniors housing

Credit: Downsizing
Call for pension asset test relief for retirement villages and seniors housing
Written by: Ron Reed

The pension assets test should be changed so that seniors selling the family home will not be penalised when moving into a retirement village or other seniors housing, according to the Property Council of Australia's 2018-19 pre-budget submission to the Australian Government.

The Property Council of Australia represents some 2,200 companies who invest, own, manage and develop property. It includes a division specifically focussed on seniors housing, known as the Retirement Living Council.

In its pre-budget submission, the Property Council says it is time to change the pension assets test as it relates to seniors housing.

“In many cases, the new home or retirement village unit will cost less than the sale price of their family home. These excess sale proceeds are included in the age pension assets test, creating a significant disincentive to rightsizing to a more appropriate home,” the submission states.

“A targeted change to the pension assets test could allow full rate age pensioners, who unlock a modest sum from the sale, to retain their full pension.

“The cost of ‘topping up’ the pension that would otherwise have been lost can partially be recouped when a pensioner moves into a retirement village due to the health, hospital and aged care savings created by retirement village living.”

In its submission, the Property Council also called on the Australian Government to:

  • Introduce a ‘Last Home Owners’ Grant’ that would cover the transactional costs of downsizing, including the payment of a cash lump sum or a deduction of stamp duty payments
  • Create a government website which is a ‘one stop shop’ for all information about seniors housing
  • Investigate the creation of a “build to rent” housing sector in Australia – as distinct to the existing model where our housing is “built to sell” – to create a new pipeline of housing options, including for seniors
  • Undertake a seniors’ housing supply study to investigate and make recommendations on supply and demand issues for purpose-built and managed housing options for older Australians.
  • Providing online training for lawyers and financial advisors to improve the quality of advice given to older Australians on housing.

The pensions assets test remains a significant barrier for older Australians wanting to move from the family home to a retirement village or a seniors housing development.

A survey by and LJ Hooker from mid-last year found that 25 per cent of potential downsizers identified changing the pension asset test as the best way to encourage downsizing.

The survey was based on feedback from 865 Australians aged over 50.

Under the test, couples with assets of more than $380,500 (and who own a home) will begin to lose access to the full pension. Additional money gained from the sale of the family home has the potential to tip couples over this limit.

There is some hope, however, that the ALP may well make the pensions assets test an election issue (a Federal election is due before May 2019).

This comes after a number of ALP MPs made noises in favour of giving some relief to downsizing seniors from the asset test when changes to superannuation rules for downsizing were debated in the Australian Parliament late last year,

The MPs pointed out that, in the final days of the Rudd Government in 2013, the ALP had announced a pension assets pilot relating to seniors’ downsizing contributions. The scheme was costed at $110 million.

Under this pilot, eligible pensioners who had lived in their own home for at least 25 years and wanted to downsize (say to move to a retirement village or independent living unit) would have been able to put a minimum of 80 per cent of the excess sale proceeds from the sale of their former home into a special account.

Up to $200,000 of funds in this account were not to count under the pension income and assets test for up to ten years or until a withdrawal was made from the account.

However, the scheme was ignominiously killed – before it even got off the ground – by the incoming Abbott Government in 2014 due to budgetary pressures.

Macquarie MP Susan Templeman told Parliament on 18 October 2017: “Sadly, this government scrapped that pilot program, so we don't really have a number of years of watching it to see what the impact might have been.”


Amanda Graham is Co-Founder, and Co-CEO of specialist retirement property websites and

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