Disincentive to downsize in Labor s sights

Disincentive to downsize in Labor’s sightsLabor’s new social policy agenda, which recommends incentivising older Australians to downsize, is a step in the right direction says the Retirement Living Council’s Mary Wood.Shadow Minister for Families, Payments and Disability Reform, Jenny Macklin (pictured), has spent two years formulating a new social policy agenda, which she says puts “tackling inequality, inclusive growth and social investment at the heart of our agenda for government”.The 138-page Growing Together document outlines seven “pillars for success”, namely jobs and education alongside social cohesion, work/life balance and longevity.In particular, the report recommends that future Labor governments “consider ways of incentivising older Australians to downsize their home without it significantly affecting their pension outcomes.”Mary Wood, executive director of the Retirement Living Council is encouraged to see the Labor Party looking at removing the disincentive to downsize.”Appropriate and affordable housing is a vital factor in maintaining the physical and mental wellbeing of senior Australians,” Wood says.”Under its current structure, the age pension asset test is a strong disincentive for seniors to downsize their home and move to a smaller house or apartment such as a retirement village unit.”A recent study by the Australian Housing and Urban Research Institute found that a change in lifestyle or inability to maintain current house or garden is a significant reason for people over to downsize their homes. However, health, illness and disability become increasingly important drivers for downsizing as people age.Currently, there is no real framework for supporting older Australians to make appropriate housing choices.The Property Council proposes a highly targeted adjustment to the age pension means test, by increasing the asset-free threshold for full age pensioners who own their own home, who are aged 75 or over and who choose to downsize.”Our policy would help these Australians unlock equity in their home without being financially penalised through a reduction in their fortnightly pension,” Wood explains.”This is about helping pensioners to ‘rightsize’ their homes at very little cost to the government, removing pressure on the already-stretched aged care system, and supporting people who want to stay in their own homes for as long as possible.”We have held positive meetings with the Coalition to discuss our policy, and we look forward to further developments from both major parties ahead of the looming federal election.”Download the Property Council’s Unlocking home equity for senior Australians to free up extra retirement income.