✨ Motor Vehicle Account Levy Rates
NEW ZEALAND GAZETTE, No. 35 — 22 APRIL 2016
Trend in underlying costs
| average levy per vehicle | Initial 2015/16 (last year's assessment) | Current 2015/16 (this year's assessment) | Prescribed 2016/17 |
|---|---|---|---|
| Motor Vehicle levy: | |||
| To fund administration costs | $19.37 | $16.48 | $17.07 |
| Funding adjustment | -$3.44 | -$9.08 | -$19.69 |
| Current levy portion | $135.95 | $135.95 | $130.26 |
| Residual levy portion | $58.30 | $58.30 | $0.00 |
| Total average motor vehicle levy | $194.25 | $194.25 | $130.26 |
rate
The current estimate of claim costs for 2015/16 has increased, reflecting higher volumes of new claims than anticipated. In addition, projections for claim durations have been increased to reflect recent trends in rehabilitation performance. 2016/17 claim costs are projected to increase compared with the current 2015/16 estimate because of medical and rehabilitation cost inflation above the LCI.
The total average Motor Vehicle Account levy rate for 2016/17 includes a funding adjustment of -$19.69 to maintain the Motor Vehicle Account at its funding target.
Appendix B: Explanatory Notes
Funding Adjustment
Adjustments to levy rates, which are used to move the funding ratio of an Account towards the funding target. The impact of funding adjustments is that levy rates will be higher or lower than the level needed to fund the cost of new year claims (including administration costs).
Funding Ratio
The funding ratio is the ratio of each Account’s assets to liabilities. It is a measure of whether the Accounts have sufficient assets to meet the Outstanding Claims Liability. Solvency is another term for funding ratio.
The liability for incurred but not reported work-related gradual process disease and infection claims is included when calculating the Work Account funding ratio.
Funding Target
ACC’s target funding ratio is 105%. This is the midpoint of the funding band of 100% to 110%.
Investment Returns
The expected returns are based on current strategic asset allocations and are consistent with ACC’s long-term expected returns for the various asset classes that make up the total investment reserves. They allow for ACC’s tax status.
Labour Cost Index
The Labour Cost Index (LCI) measures changes in salary and wage rates for a fixed quantity and quality of labour input.
New Year Claims
Claims that occur during a new levy year. New year claims costs are the estimated lifetime cost of those claims.
Outstanding Claims Liability
The Outstanding Claims Liability (OCL) is an actuarial estimate of net present value of all future costs for accidents that have already happened including an allowance for claims incurred but not reported, and re-opened claims.
Residual Levy (or Residual Portion)
Until the 2016/17 levy year, the Earners’, Work and Motor Vehicle levies each consisted of two parts:
- a current portion; and
- a residual portion.
The purpose of the residual levy was to fund the ongoing costs of claims that occurred before 1 July 1999 when the Scheme was funded on a pay-as-you-go basis. Under pay-as-you-go, levies were sufficient to cover only the annual expenditure on injuries.
The government decided to cease collecting the residual levy from 1 April 2016 for the Work and Earners’ Accounts and from 1 July 2016 for the Motor Vehicle Account. This will not affect the amounts people pay in motor vehicle levies. More information can be found at
www.shapeyouracc.co.nz/documents/
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NZ Gazette 2016, No 35
✨ LLM interpretation of page content
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Prescribed Motor Vehicle Account levy rates for the 2016/17 levy year
(continued from previous page)
🏥 Health & Social Welfare31 March 2016
Accident Compensation, Motor Vehicle Account, Levy Rates, Regulations, ACC, Insurance, Consultation, Financial Projections, Funding Policy, Claim Costs