AVEO is the latest retirement village operator to provide new payment options to residents.
Following on from similar moves offering more contract choice by retirement living operators Lendlease and Stockland, Aveo has launched two new alternatives to its existing Aveo Way contract introduced in 2015.
Aveo’s three contract options include the current Aveo Way, as well as two new alternatives, called ‘Certainty’ and ‘Essentials’.
Aveo Group chief executive Geoff Grady said the new suite of contracts are about offering more choice with three options that offer enhanced conditions, greater flexibility and improved affordability.
The ‘base level’ contract Aveo Essentials is described by Aveo chief executive Geoff Grady as “a contract suitable for seniors looking for an easy and affordable entry into retirement living”.
As with all three Aveo contracts, there is a deferred management fee (DMF) of 35 per cent (25 per cent in new villages) based on the purchase price. On the Essentials contract this is calculated over five years. The move-in guarantee is three months and guaranteed buyback is 12 months.
As with all three contracts, there is no sharing in capital gain (or loss) and the operator covers refurbishment costs and selling fees.
The Aveo Way contract comes with adjusted guarantee periods and a shorter buy-back period (six months on both) with the DMF capped after three years.
Where the Aveo Certainty differs is in terms of what happens when you want to move from one village to another, or a residential aged care facility.
Mr Grady said the Certainty contract addresses one of the greatest pain points for Australian retirees considering entering into retirement living - the need to transition quickly and seamlessly into higher levels of care when their care needs increase – often at a time when financial pressures and advanced care requirements need to be resolved quickly.
There are two things the industry needs to do to overcome negative perceptions. One, is to offer choice. And the second is to offer transparency. And that’s what this is doing.
- Rachel Lane, Aged Care Gurus
“We understand that when an individual’s care needs change their living circumstances need to be assessed rapidly to ensure higher care can be accessed immediately, however financial concerns can put immense pressure on seniors and their families,” Mr Grady said.
Under the Certainty contract the DMF, move-in guarantee and guaranteed buyback are the same as the Aveo Way contract. However, if resident wants to move to a another Aveo village or Freedom Aged Care unit or an Aveo residential aged care facility they don’t have to pay another DMF.
There is a $2000 annual fee (on the Certainty contract only) to cover the transfers, payable on exit instead of a DMF.
“The decision to release these new contracts ensures Australian seniors have access to choice and increased financing options as they enter a new phase in their life,” said Mr Grady.
Aveo has 93 villages and residential aged care facilities.
Certainty ‘has got legs’
Rachel Lane, principal of Aged Care Gurus, said while the new financial models “may not be perfect” the move towards more choice for consumers was to be celebrated.
“At least we are getting a change in the industry. Two years ago this was unimaginable,” she said.
“There are two things the industry needs to do to overcome negative perceptions. One, is to offer choice. And the second is to offer transparency. And that’s what this is doing.
While Lane said some people might be “up in arms” that there is still a deferred management fee, getting rid of double DMF was welcome. She said: “It’s an industry wide issue and a very expensive one for consumers”.
“While the Aveo Way and Essentials contracts are more about how long you will be living in the village and how quickly you want your money when you leave, the Certainty contract has got legs on it,” she said.
“If you stay within the Aveo group of villages and residential aged care, this gets rid of potential double dip on fees.
“Aveo are the first to do this. I think it is a good thing, especially if you are going into village that is co-located with aged care it means that what you have paid upfront moves with you without the need to pay again.”