A common question among those looking into a retirement village and aged care community living is ‘can I get rent assistance living in a retirement village?’. Our financial expert Justin Cilmi from Devon Partners crunches the numbers to see who is eligible.

Upon entering a retirement village, all residents are asked to pay an ‘Entry Contribution (EC)’. The amount of the EC has an impact on the age pension assessment for that person or couple and can determine if they are eligible for any rent assistance to help towards their ongoing residents’ fees

Social security assessment for retirement village residents

The following definitions are fundamental to the assessment of retirement villages for social security purposes:

• Entry Contribution (EC): This is the amount paid to enter the retirement village. This amount determines homeownership status (i.e. homeowner or non-homeowner) and eligibility for rent assistance.
• Extra-Allowable Amount (EAA): This is the difference between the homeowner and non-homeowner asset limit rates, which is $207,000 as at July 1, 2018 (this limit is updated on July 1 each year).

The table below sets out the homeownership status, asset test assessment and eligibility for rent assistance, which is determined by whether the amount paid as an entry contribution exceeds the extra-allowable amount:

Let’s consider two examples to determine a person’s homeowner status and eligibility to rent assistance.

Example 1 – Estelle

Estelle moves into a retirement village on July 1, 2018. The entry contribution is $400,000. This entry contribution exceeds the EAA ($207,000 at July 1, 2018). Her only other assets are:

• Home contents $5,000
• Cash $150,000

As a result, Estelle will be considered a Homeowner for age pension testing, meaning:

• The EC of $400,000 will not be assessed for the asset or income test.
• Estelle will not be entitled to any Rent Assistance.

Under the Homeowner assessment, Estelle is entitled to the maximum age pension for a single homeowner of $23,598 per annum. If Estelle were considered a Non-homeowner (meaning the EC of $400,000 is assessed as an asset), her Age Pension entitlement would reduce to approximately $16,622 per annum.

Example 2 – Frank

Frank moves into a retirement village on July 1, 2018. The entry contribution is $185,000. The EC is less than the EAA ($207,000 at  July 1, 2018). His only other assets are:

• Home contents $5,000
• Cash $150,000

As a result, Frank will be considered a Non-Homeowner for age pension testing, meaning:

• The EC of $185,000 will be assessed for the asset or income test.
• Frank will be entitled to any Rent Assistance.

Under the Non-Home Owner assessment, Frank is entitled to the maximum age pension for a single homeowner of $23,598 per annum, as well as being eligible to apply for Rent Assistance.

If Frank were assessed as a Homeowner (meaning the EC of $185,000 is not assessed as an asset, however, he is then assessed against a lower asset test threshold), his age pension entitlement would reduce to approximately $17,245 per annum and he would have an entitlement to Rent Assistance.

As you can see, the difference in your Entry Contribution to a Retirement Village can have a significant impact on your age pension entitlements, so is worth considering prior to entering a new retirement community. If you are already in a retirement community and you think you may be eligible for rent assistance, you should inquire with Centrelink to confirm.

Important Note: The information provided about is in intended as a guide only. It is important to seek professional, accredited financial advice when considering whether the information is suitable to your personal circumstances.