Following our articles on negotiable entry fees to protect pension benefits, retirement village operator Seasons Private Aged Care’s CEO, Nick Loudon, contacted us with an outline of their philosophy on negotiated contracts.
They believe the ethical approach is to set a dollar amount for the exit fee – not a percentage of the ‘entry contribution’. The dollar amount is in effect the cost of accommodation whilst the resident is with Seasons and gives certainty to the client.
They will set an amount – say $200,000 capped for a two-bedroom unit over five years. This will be identical to every similar unit in the village, irrespective of the in going contribution.
The client can then discuss the upfront amount they wish to contribute to their ‘housing’ to protect their pension, which will all be returned to them less the $200,000 when they leave.
If they wish to utilise the ingoing contribution to pay for additional hours of home care they can – meaning they can have as any hours as they feel they need.
Nick Loudon has long maintained that the entry contribution should be treated as an ‘accommodation bond’ because “that is what it is” under a lease contract. Coupled with the dollar cost for accommodation when they leave, the contract is far simpler to explain – and ‘more ethical’.
