Next step in reform needed to remove penalty for downsizing

Changes announced by the Federal Government on Thursday to better target the age pension and ensure it remains on a sustainable footing are welcome, according to the Property Council of Australia, but further reform is needed to ensure downsizing remains a viable option.

Executive Director – Retirement, Mary Wood, said it was vital that the Government’s changes don’t add to the barriers to pensioners wanting to downsize.

“Current pension eligibility rules act as a disincentive for pensioners looking to downsize,” Ms Wood said.

“We support the Government’s action to increase personal responsibility, unfortunately these changes entrench the existing disincentive.

“Further reform of the aged pension system is needed so that we stop penalising older Australians who want to move into smaller, more appropriate housing and use the equity in their family home to better support themselves.

“The benefits of encouraging more pensioners to downsize and unlock the equity in their family homes are manifold.

“Research commissioned by the Property Council shows that downsizing to retirement communities has both social and economic benefits by reducing loneliness, delaying entry to aged-care facilities and takes pressure off the federal budget with significant long-term savings to public hospital and aged-care expenditure.

“Downsizing also boosts the supply of housing for families, helping affordability.

“We need a system that enables more seniors to downsize, and that means removing the penalty that applies to pensioners wanting to move into smaller homes.

“While we welcome changes that inject more fairness into the age pension system, we are concerned to ensure that reform is holistic and does not exacerbate the existing structural disincentive to downsizing.”

 

Media contact: Fiona Benson | M 0407 294 620 | E [email protected]