Changes to Pension Boost scheme spark concern for thousands of people

A sleeper issue with the potential to alienate many older Australians -as many as 50,000 in Queensland alone, could become a big issue for the Morrison Government ahead of the federal election, writes Peter Gleeson.

There’s a sleeper issue that the Morrison Government needs to address before it tries to win the next election in May.

It has the potential to alienate many thousands of people living in retirement villages unless it’s handled judiciously and with care.

The changes made to the Pension Boost Scheme (now Pension Loan Scheme), effective from January 1, have been largely welcomed, however retirees say they are deficient in one key area.

It’s all about retirees freeing up their cash flow and not being handcuffed to expensive repayments of retirement village units.

Traditional products, including the existing Pension Boost Scheme, exclude retirees in land lease communities. Even though these retirees own their own homes, they do not own their land under the Manufactured Homes (Residential Parks) Act 2003.

The office of Families and Social Services Minister Anne Ruston has dismissed concerns. File picture: Amanda Parkinson

These types of arrangements are relatively new in the Australian context, maybe 20 years old, and they cover about 50,000 residents in Queensland alone.

Retirees say the current Pension Boost Scheme, together with the general Reverse Mortgage Lending industry, discriminates against residents, purely because they do not own the land.

It’s a loophole that has angered retirees, who want greater security in their twilight years.

In emails sent to retiree lobby groups, a representative for Families and Social Services Minister Anne Ruston, dismisses the issue.

“The Home Equity Access Scheme (the scheme) is generally available to all senior Australians of aged pension age who meet certain residency requirements and own suitable real estate in Australia to use as security,’’ the spokesman said.

“For a property to be used as security under the scheme, a person must have their name on the title for the land. As loans under the scheme are generally repaid only when the securing property is sold, or out of the person’s estate, this ensures the security is likely to be adequate over the long term and the debt can be recovered. Properties using land lease, leasehold, or loan licence arrangements do not constitute land ownership, and cannot be used as security for the purposes of the scheme.’’

In other words, go away, nothing to see here. Might be one for the government’s Mr Fix it, Treasurer Josh Frydenberg.