The founder of a retirement specialist that assists seniors to access the Government’s reverse-mortgage solution (known as the Pension Loans Scheme) hopes that the Retirement Income Review leads to more help for struggling retirees.
Paul Rogan from Pension Boost wants to see more than just an increase in product offerings for retirees. Solutions that supplement existing retirement income streams already exist for home-owning retirees.
“Many retired baby boomers have most of their capital in their homes but hold a limited amount of superannuation. The majority have access to some Age Pension and do not want this put at risk.
“In coming from a position of caution, many are overlooking the benefits to them of the Pension Loans Scheme. With more than 1.8 million age pensioners owning their own homes, the potential to top up their income without affecting their Age Pension eligibility is significant,” said Paul Rogan, founder of Pension Boost.
Mr Rogan believes that five changes could materially remove barriers to take up of this innovative Government-backed reverse mortgage which is available everywhere in Australia:
- Investment in seniors’ education and awareness of the PLS
- Change the name to be more inclusive (for example, ‘Seniors Loans Scheme’). Australians equate the word ‘pension’ with being an Age Pensioner and a simple name change would clear up confusion
- Allow a one-off upfront lump sum for larger expenses with the balance of the loan paid in fortnightly instalments. Retirees may have home repair/maintenance costs or need a new vehicle that their savings cannot provide for
- Reduce the PLS interest rate from 4.5 per cent to a more appropriate level considering the cost of funds and operating scale advantages the government has over commercial providers. Further, the PLS rate should be independently benchmarked to the RBA official cash rate (or RBA standard home loan variable rate) to improve transparency for seniors
- Improve protection for senior consumers by providing a ‘no negative equity guarantee’ (equivalent to regulations applying to commercial reverse mortgage providers since 2012).
More choice in retirement income products is needed, the need for people to not sacrifice themselves in retirement is important and Mr Rogan applauds the Government for raising the level of debate on retirees living better and with less money stress.
Paul Rogan
Founder and CEO
Pension Boost
Sydney
M: (+61) 0423 780 113
paul@pensionboost.com.au
https://pensionboost.com.au