Some people thinking of joining a retirement village, or their families, have been concerned about a run of alarming stories in the media, driven mainly by one journalist.
I would like to put some balance into the discussion.
Approximately four individual villages and one village operator have been targeted.
Across Australia there are over 2,000 retirement villages, operated by close to 700 different owners.
60% of villages are owned and operated by big and small private companies.
The other 40% of villages are owned and operated by big and small Not For Profit organisations, church and charities plus local community groups.
All retirement villages operate under the same laws, predominantly the Retirement Village Act in each state. Every operator has to prepare its contract under these laws and regulations.
These laws came into being around 1980 – 37 years ago. At that time the ‘exit fee’ concept, known as the Deferred Management Fee, (DMF) came into being. All retirement villages and all operators have been using this type of contract ever since, including all Not For Profit village operators.
Today 200,000 village residents live in 170,000 village homes. This means 170,000 individuals and couples have received a village contract, which is like the contract to buy a house, and decided to sign it. Many will have got legal advice beforehand and some will not have. That has been their choice.
Every year an average of 10% of residents leave their village, with approximately 70% passing away and 30% going into aged care homes.
This means about 17,000 people will be settling their contract with the village operator, paying their Deferred Management Fees. This is 325 people every week or 65 people every day.
With these transactions taking place for 37 years – intelligent people making the decision to join a village and signing contracts, and people departing villages and paying their agreed contract fees – clearly that means the village system works.
The fact that the laws have been developed over these 37 years and that every village presents its village homes under these laws and fees says that they are understood by the customers – the village residents.
The media coverage has been colourful and has prompted operators and governments to review the contracts and laws customers want – which can only be a good thing. But it would not be good to mislead people that are looking at villages as an option into thinking that it would be a mistake.
To say that would be to tell the 170,000 village residents that they have made the wrong decision, which would be disrespectful and factually incorrect.
