✨ ACC Levy Rates Report
NEW ZEALAND GAZETTE, No. 22 — 2 MARCH 2017
- This is inconsistent with the timing of other economic assumptions, however this has no material impact on levy paths.
See Appendix C for an explanation of these terms.
A. The Work Account
Prescribed Work Account Levy Rates for the 2017/19 Levy Period (1 April 2017 to 31 March 2019)
Following public consultation, the Board recommended that the Government reduce the Work Account average levy by 10%, from $0.80 to $0.72 per $100 liable earnings for the 2017/19 levy period. Expected claims costs have increased, driven primarily by more claims receiving weekly compensation. This has been more than offset by changes in economic factors.
The recommended rates, as well as the indicative out-year levy rates in the Board’s consultation, were consistent with the funding policy. Cabinet agreed to the rates recommended by the Board, and the rates have now been prescribed in the Accident Compensation (Work Account Levies) Regulations 2017.
Levy rates have been set at a level below new-year claim costs so as to result in an expected deficit of $82 million for the levy period, and to reduce the expected funding ratio from 124% to 122% by 31 March 2019. Indicative future levy rates, shown below, gradually move the Work Account’s funding ratio towards the funding target.
B. The Earners’ Account
Prescribed Earners’ Account Levy Rate for the 2017/19 Levy Period (1 April 2017 to 31 March 2019)
Following public consultation, the Board recommended that the Government raise the Earners’ Account levy by 3%, from $1.21 to $1.25 per $100 liable earnings for the 2017/19 levy period. Expected claims costs have increased, driven primarily by more claims receiving weekly compensation and by claims remaining on the scheme for longer than previously projected. The relatively short duration of liabilities for this Account, which don’t respond as strongly to changes in economic conditions as the other levied Accounts, means that expected claim costs are only partially offset by changes in discount rates and assumed investment returns.
The recommended rate, as well as the indicative out-year levy rates in the Board’s consultation, were consistent with the funding policy. Cabinet decided to keep the rate unchanged at $1.21, and this rate has now been prescribed in the Accident Compensation (Earners’ Levy) Regulations 2017.
Levy rates have been set at a level below new-year claim costs so as to result in an expected deficit of $213 million for the levy period, and to reduce the expected funding ratio from 123% to 118% by 31 March 2019.
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NZ Gazette 2017, No 22
✨ LLM interpretation of page content
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Report on ACC Levy Rates for Work and Earners' Accounts
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🏥 Health & Social WelfareAccident Compensation, Levy rates, Work Account, Earners' Account, Financial projections