New Zealand Gazette – 2016 – No. 22

Page 8

✨ Accident Compensation Levy Projections



NEW ZEALAND GAZETTE, No. 22 — 11 MARCH 2016
2016/17 1.21 1,479 1,389 243 1.13 0.20 8,845 7,294 1,551
2017/18 1.24 1,579 1,466 254 1.15 0.20 9,195 7,679 1,516
2018/19 1.26 1,669 1,538 265 1.16 0.20 9,557 8,068 1,489
2019/20 1.27 1,747 1,610 273 1.17 0.20 9,927 8,470 1,456
2020/21 1.29 1,839 1,685 282 1.18 0.20 10,320 8,891 1,429
2021/22 1.30 1,919 1,765 291 1.19 0.20 10,722 9,331 1,391
2022/23 1.32 2,018 1,846 300 1.20 0.20 11,151 9,791 1,361
2023/24 1.33 2,104 1,931 309 1.22 0.19 11,587 10,264 1,323
2024/25 1.35 2,211 2,020 318 1.23 0.19 12,050 10,755 1,295
2025/26 1.36 2,305 2,112 327 1.24 0.19 12,525 11,265 1,261
2026/27 1.38 2,419 2,208 337 1.26 0.19 13,032 11,790 1,242
2027/28 1.39 2,520 2,309 341 1.27 0.19 13,551 12,334 1,216

The table above presents the projected levy and funding path after applying the Board’s funding policy. The table below summarises the key assumptions underlying these projections.

Earners’ Account Key Assumptions

Year ending 31 March Claim numbers (entitlement claims) Growth in average claim cost Standard inflation (LCI) Superimposed inflation (growth in cost in addition to LCI) Exposure (number of earners) Exposure (liable earnings) ($b) Investment return forecasts Risk-free interest rates (June year)
2015/16 52,134 1.9% 1.9% 2,401,088 118 5.0% 3.2%
2016/17 53,722 1.9% 1.9% 2,449,642 123 5.0% 3.0%
2017/18 55,036 1.9% 1.1% 2,487,512 128 5.0% 3.0%
2018/19 55,787 1.9% 1.6% 2,518,167 133 5.0% 3.2%
2019/20 56,349 1.9% 1.7% 2,545,242 138 5.0% 3.3%
2020/21 56,914 1.9% 1.6% 2,570,773 143 5.0% 3.4%
2021/22 57,464 1.9% 1.7% 2,595,615 148 5.0% 3.5%
2022/23 58,004 1.9% 1.7% 2,620,005 153 5.0% 3.5%
2023/24 58,542 1.9% 1.7% 2,644,332 159 5.0% 3.6%
2024/25 59,071 1.9% 1.7% 2,668,205 164 5.0% 3.6%
2025/26 59,590 1.9% 1.7% 2,691,652 170 5.0% 3.6%
2026/27 60,074 1.9% 1.8% 2,713,511 176 5.0% 3.6%
2027/28 60,525 2.0% 1.8% 2,733,886 182 5.0% 3.7%

The following table compares the components of the 2016/17 prescribed levy rate with those applied in 2015/16.

Trend in underlying costs

Levy excl. GST per $100 liable earnings Initial 2015/16 (last year’s assessment) Current 2015/16 (this year’s assessment) Prescribed 2016/17

Earners’ portion only:

| To fund the cost of new claims during the new levy year | $0.97 | $1.01 | $1.04 |
| To fund administration costs | $0.18 | $0.18 | $0.18 |
| Funding adjustment | -$0.05 | -$0.10 | -$0.11 |

Earners’ portion of Treatment Injury:

| To fund the cost of new claims during the new levy year and administration costs | $0.09 | $0.11 | $0.11 |
| Funding adjustment | $0.03 | $0.02 | -$0.01 |

| Current levy portion | $1.22 | $1.22 | $1.21 |
| Residual levy portion – Earners’ only | $0.02 | $0.02 | $0.00 |
| Residual levy portion – Treatment Injury | $0.01 | $0.01 | $0.00 |
| Total Earners’ Levy rate | $1.26 | $1.26 | $1.21 |

The current estimate of claim costs for 2015/16 has increased, reflecting higher volumes of new claims than



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Online Sources for this page:

Gazette.govt.nz — PDF NZ Gazette 2016, No 22




✨ LLM interpretation of page content

🏥 Report in Relation to Rates of Levies Prescribed in the Accident Compensation (Work Account Levies) Regulations 2016 and the Accident Compensation (Earners' Levy) Regulations 2016 (continued from previous page)

🏥 Health & Social Welfare
Levy rates, Accident Compensation, Work Account, Earners' Account, Financial projections, Funding policy, Levy stability, Funding stability, Claims experience, Investment returns, Risk-free interest rates, Economic conditions, Funding ratios, Work Account levy rates, Earners' Account levy rates