Category: Newsletters

Articles for your marketing team to use to send to your COI’s.

ACG Adviser Newsletter – Rate changesto make care for low-means residents more expensive March 2020.docx

July 1 will bring about the usual changes to pension and aged-care rates and thresholds. Among them is a change to the Maximum Permissible Interest Rate, which used to set Daily Accommodation Payments (DAP) in aged care. It will reduce from 5.96 per cent to 5.54 per cent. On the surface, it would appear to have made aged care cheaper but the reality is it’s a mixed bag. Market payers indeed will be better off.  Under the old rate, a lump sum Refundable Accommodation Deposit (RAD) of $500,000 would have an equivalent daily payment of $82. Under the new rate, the equivalent DAP is $76, a saving of about $2,000 a year. However, those classified as being of low means will actually be worse off. For them, a drop in the interest rate increases the price of their lump-sum accommodation payment. Near-impossible task Let’s look at an example. Shirley is a full pensioner with $150,000 of assessable assets. She qualifies as a low-means aged care resident and her Daily Accommodation Contribution (DAC) is $48 per day. Shirley’s lump sum RAD is calculated using the Maximum Permissible Interest Rate (MPIR). Under the old MPIR rate of $48 a day, it would give her

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ACG Adviser Newsletter – New way to sell a slice of your home March 2020.docx

A new home-equity release product launched this week by Australian Securities Exchange listed “fractional investing” platform DomaCom promises to help you unlock the value of your property.  Equity release normally works on either a credit basis – the provider lends you money and charges interest that compounds each month – or on a real estate security basis, where the provider buys a portion of your house. However, the new product – called the DomaCom Fund – is an Australian Securities and Investments Commission-registered managed investment scheme.  Essentially, it turns your home equity into shares and connects you with people who want to buy some.  People over the age of 60 can “sell the back bedroom” – that is, a fraction of their home. The seller nominates the price and whether they wish to receive a lump-sum or monthly payment. On the other side of the transaction is the investor. They receive monthly income of 3 per cent and a share of the capital value of the home. Lump sum or monthly? Maintaining the property and covering ongoing costs, such as insurance and rates, is shared between the seller and the investor.  When the property is sold in full, the seller and

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ACG Adviser Newsletter – Changes in pipeline for pooled lifetime income streams March 2020.docx

The new financial year starting July 1 seems to always bring with it changes in aged care rules –some good, some less so.  The most important thing is to understand what the changes are and, if you can, take action to get the best outcomes. Among the developments this year will be the treatment of pooled lifetime income streams, such as annuities. When it comes to financing aged care costs, one financial product in particular has been highly popular.  It’s called CarePlus and it is a combination of an annuity and life insurance policy.  The annuity component pays a monthly income, while the insurance policy guarantees a payout equal to the original investment amount (unless withdrawn early). Let’s look at how this product is assessed and its treatment after July 1.  Those who purchase the product before July 1 will have their assessment grandfathered. Annuity component The annuity pays a set amount of income for life. The amount you receive depends on the amount invested and your life expectancy. Under the current rules, the purchase price is divided by your life expectancy to calculate what is known as the deductible amount. This amount reduces the value of the asset each

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The real cost of moving to a retirement village – March 2020.doc

The biggest mistake most people make when working out if moving to a village is affordable, is to simply compare the sale price of their present house with the price of their new one. The conclusion is, if they are selling for more than they are paying to buy, it is affordable. But this only examines a small part of the transaction. If you are trying to crunch the numbers on moving to a retirement village a simple method is to break it down into the Ingoing, Ongoing and Outgoing™ – this can be as simple taking a piece of paper and dividing it into those three sections. If you are comparing one village with another, or perhaps different payment options for the same home this simple technique can help identify differences in what you will pay that may not be apparent if you simply compare purchase prices. Crunching all of the numbers will ensure that you understand what you pay and when. Seeking specialist advice can ensure there are no nasty surprises down the track. Identifying the impact on your pension entitlement, eligibility for rent assistance, home care package costs, your cash flow position together with any tax and

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Category: Newsletters

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