New Zealand’s retirement village industry is sometimes criticised for failing to deliver a fair deal for residents, but what are the alternatives for older adults as they contemplate the next chapter of their lives? And are they able to deliver the same things villages can? Here, JUDE BARBACK takes a closer look at flatting for the elderly, retiring abroad and other options.
A couple in their fifties recently shared with me their plans for when they are, as they so eloquently put it, “past it”.
They envisaged themselves some 20 years from now moving into an apartment, adjacent to other apartments all occupied by their friends.
“It’ll be great,” said the he of the couple, “We won’t need to worry about getting lonely. We’ll all be growing old together, so if one of us pops our clogs, we’ve got the others to fall back on.”
At my suggestion that they could all just move into a retirement village together, he scoffed. “What, and lose all my hard-earned savings on maintenance fees, activities I won’t do, and a jazzed up rental agreement?”
It is not the first time I’ve heard criticism of this variety launched towards retirement villages. But the conversation got me wondering about the variety and feasibility of alternatives to retirement village accommodation.
Retirement villages – right choice or ripoff?
While the retirement village industry is generally considered a boom industry, concerns about residents being “ripped off” or “taken for a ride” are fairly common.
This is primarily because in most cases residents buy a licence to occupy a retirement villa or apartment, not a freehold residence. Consequently, residents will receive no capital gain on their villa.
Over the years, many have questioned the fairness of this system. Diana Clement has drawn attention to this issue several times in the Herald. “If there’s an ‘investment’ that’s guaranteed to eat capital, it’s retirement villages,” she stated in an article last year.
Peter Bruce is also scathing. In his article “Licence to occupy = licence to overcharge”, Bruce shared with INsite readers why he believes occupation right agreements (ORAs) and licence to occupy (LTO) agreements in particular are geared up in favour of the operator and unfairly disadvantage the resident and their family. Bruce argued that it is unfair that a resident’s family should receive no part of any capital gain made when a new LTO is sold for his or her residence once he or she has vacated it, especially when the family is often required to pay ongoing costs after vacating the residence, while the operator seeks to make the best possible deal on the subsequent LTO agreement.
Terry Carson, in his article on the website GrownUps, points out that those who have opted to live in a retirement village have essentially chosen to rent a particular sort of lifestyle that is available on prescribed written terms and conditions, and over time will lose residents about thirty per cent of their original capital while they must continue to meet ongoing financial commitments.
And there are other bugbears. Aside from the capital conundrum, another common area which has been known to anger village residents and their families is when the range or quality of services and amenities covered by fees are reduced.
However, most residents go into a retirement village with their eyes wide open. Retirement villages are generally keen for residents to have family members go through the ORA with them carefully before signing. And the Retirement Villages Act 2003 dictates that residents must receive independent legal advice before signing the ORA. The same lawyer who witnesses your signature on the ORA must also certify that they have explained to you the general effect of the ORA and its implications. Furthermore, the Act specifies a cooling-off period of 15 working days following the signing of the ORA, should resident have a change of heart.
It would appear that, on the whole, retirement villages are not out to trip people up. Legislation such as the Act and the recently updated Code of Practice are there to keep the industry in check.
The reasons people seek out retirement villages – the sense of community, companionship, lifestyle, security, and increasingly, accessibility of care – often surpass any gripes about losing capital. It is easy to bemoan what a poor investment a retirement villa or apartment is in the monetary sense. However, when one stops to consider the investment a resident might be making into his or her wellbeing, it starts to make sense – if not cents. The price paid by the resident is often considered worth it for the lifestyle gained, worth it to avoid loneliness, worth it to get on the priority list for the village’s care facility when the time comes. And it is this premise which allows the retirement village industry to operate as it does.
This is surely why the retirement village industry is going from strength to strength. But for those who are not yet in need of rest-home or hospital level care and are looking for an alternative to the typical village set-up, there are options out there. Cost, circumstances, or personal preference: there are a multitude of reasons why an older person might seek shared accommodation that doesn’t come in corporate packaging.
Buy your own village
One way round it is for residents to own their own village. It might sound far-fetched, but in England, a group of residents from Woodchester Valley Village, located in the Cotswolds, did just that. They successfully bought the freehold to their own retirement village after its owners went into liquidation.
Sick of paying a profit-making company for the upkeep of the village, the group approached the administrators and asked them how much they could buy the village for.
“We did not want to risk having another private company running our homes for profit. We approached them and just asked – ‘How much?’,” said chairman of the village’s residents’ association Peter Wilson, as reported in The Daily Mail.
The village continues to be professionally managed, with staff on-site 24 hours a day and domiciliary care available if required.
Betty Young, also of the residents’ association, hopes other villages will follow their example.
“We believe this is the future and we hope it will be the model for other villages to follow, so that they can also take full control of their homes.”
Of course, a certain level of wealth is required to pursue such a path as that taken by the residents of Woodchester Valley Village. Interestingly, according to a British survey by the National Association of Pension Funds (NAPF), six out of ten people do not expect to be able to retire in comfort in the UK. The survey found that the high cost of living and declining pension pots mean that only one in seven people believe they will have enough money to live comfortably in the UK once their working life ends.
The NAPF warned of a “grey flight” from the UK as millions of Britons consider emigrating to cheaper countries. Australia, the USA, France, Spain and Canada are reportedly the most popular, but countries like Thailand, Brazil and Ecuador are growing in popularity.
“In a globalised world people will scour the planet for the right lifestyle at the right price. We expect to see more ‘grey flight’ as people try to squeeze the most out of their pension,” said Joanne Segars, chief executive of the NAPF, as reported by The Telegraph.
It sounds vaguely reminiscent of the film The Best Exotic Marigold Hotel in which a group of British pensioners moves to India to escape the crippling cost of retiring.
But are New Zealand retirement living options under similar threat?
It would appear it is our superannuation policies which are contributing to people leaving New Zealand shores.
According to the Herald some people find that retiring overseas means they are better off thanks to uneven deductions New Zealand makes from the overseas state pensions paid to recipients of New Zealand Super.
The direct deduction policy has attracted much negativity over the years. Under Section 70 of the NZ Social Security Act, migrants and New Zealanders who have lived and worked overseas are required to declare any foreign government-administered pension investments and these can be deducted from New Zealand Super entitlements. Website NZPensionAbuse.org claims, “On reaching the age of 65, roughly one in every four New Zealanders discovers that his/her right to the ‘Universal Pension’ doesn’t exist.”
However, despite concerns parliament voted against running an inquiry into the deductions policy.
Figures submitted to the Social Security Select Committee last year showed that as at August 2012 the annualised value of NZ Super exports was over $230 million, with over 34,000 people living in 27 countries. The vast majority, 89 per cent, were resident in Australia.
If a person qualifies for New Zealand Super, they can live overseas and receive a proportion of NZ Super payments, the amount depending on how long they spent in New Zealand between the ages of 20 and 65. Some arrangements with some countries, particularly Pacific countries, allow for NZ Super to be paid in full to recipients.
New Zealanders retiring to the UK are able to access UK benefits under the social security agreement between the two countries.
Spending the later stage of one’s life in another country is not everyone’s cup of tea, and there may be easier, more affordable options closer to home.
The recent Westpac home loans television ad featuring older adults experiencing the woes of flatting together is designed to bring a smile. What could be worse than arguing about who used the last of the milk when you’re in your eighties?
But in reality, the concept of older adults living in a flatting situation is a logical antidote to social isolation and feeling unsafe – two common complaints of the older person living independently. For many, flatting in your twenties provided the bridge between living at home with your parents and establishing your own home with your partner. It gave confidence and companionship at a time “between” homes. Fifty years or so on, when an older person may start to lose their confidence and companionship derived from living independently in their own home for all those years, it stands to reason that shared accommodation becomes an appealing option once again.
However, age-related health concerns are the complicating factor with this concept, and any shared accommodation set-up would need to consider care arrangements.
Abbeyfield New Zealand provides a variation of this concept. An Abbeyfield House aims to be “a typical house in a typical street”, providing affordable rental accommodation and an independent lifestyle for up to 14 older adults. Each house is looked after by a housekeeper/cook and there is a strong emphasis on volunteer input.
While the houses are geared up for electric wheelchairs, walking frames and other mobility aids, residents need to be able to monitor their own health conditions and maintain their own medication regimes. Care is not provided, but home support services are accessible to residents.
Originating from the United Kingdom, Abbeyfield was introduced in New Zealand in 1991. There are now eleven Abbeyfield houses, with two further houses under construction and several more projects in the planning stages.
The rise of day care programmes
Most older people want to remain in their own home for as long as possible, but social isolation and other concerns, such as memory loss or waning health, mean that it becomes increasingly difficult to retain independence.
The reality in many cases is often that a fall or other event is the trigger for that person eventually leaving their home and being referred into residential care.
Home and community support services play a vital role in helping older New Zealanders remain in their homes for longer. Day care programmes offered by aged residential care facilities are also a good interim step for older people, which can make the transition from home to rest home a little easier and smoother.
There are many good examples of day programmes to be found in the United States. Adult day care facilities in Pennsylvania, for instance, provide social interaction and recreation, as well as transportation, basic personal care, reality orientation, and self-help training for older adults who wish to remain in their own homes.
An increasing number of New Zealand’s aged care facilities are now offering day care services. Many of Bupa’s facilities offer such programmes, designed to provide a change of scene for older people, and allow families and carers to have some respite.
Day care programmes also aid a smoother transition if the day care participant eventually becomes a resident at the facility. He or she is familiar with the facility, staff and other residents, and the facility has a better understanding of the resident’s needs.
In Lower Hutt, Aroha Care Centre’s Day Centre offers activities and social interaction to elderly living in the community. Attendance at the Day Centre is either funded through Nurse Maude, a disability allowance or by private arrangement.
Beyond these sorts of programmes, there are also countless examples of volunteer-driven services that allow for older people to meet up on a regular basis. While they may not necessarily be care-focused, often the stimulation derived from social interaction makes such groups invaluable for older people clinging to their independence.
One initiative along these lines is Enliven’s Homeshare service that enables isolated older people to meet in small groups in private homes in their community. Hosts from the community, trained and supported by Enliven, open their homes to a small group of older people for six hours and provide a hot meal.
What really matters
Many of the alternatives to retirement villages do indeed allow older adults to avoid losing capital while enjoying many of the things villages offer – companionship, security, independence, care. However, it is difficult to find all these things encompassed so neatly in one setting outside of the retirement village. With many villages now offering personalised continuum of care solutions, it is not hard to understand why they remain a popular choice for many.
To return to the couple who envisaged spending their later years in an apartment with their friends next door, it will be interesting to see if such a plan materialises. Even more telling will be to see if the living arrangement delivers everything they need as they grow older.
The good news is there are options out there to suit every budget and personality; and options within options: indeed, no two villages, rest homes or home support packages are the same. The important thing for people starting to plan their next step in life is to think about what really matters to them, and make their decision accordingly.