✨ ACC Levy Rates Analysis
NEW ZEALAND GAZETTE, No. 22 — 2 MARCH 2017
future levy rates, shown below, gradually move the Earners’ Account’s funding ratio towards the funding target.
Cabinet adopted a lower rate than that recommended by the Board. The impact of this is that over the next two
years the funding position will move towards the target more quickly than envisaged under the funding policy. All
else being equal, future levy rates will need to increase more quickly than would have otherwise been the case in
order for levy rates to ultimately return to the level of new year claim costs.
It is expected, using the assumptions underlying the 2017/19 recommendation, that the Board will recommend
that the 2019/21 levy rate increase by 9% ($1.21 to $1.32), instead of by 5% ($1.25 to $1.31). The actual 2019/21
levy rate recommendation will vary from these forecasts depending on claims and economic experience. After this
projected initial adjustment for the lower expected 31 March 2019 solvency position, future levy rate increases are
expected to be similar to those projected for the 2017/19 consultation, under the funding policy. The probability of
the funding position falling below 100% in the short to medium term is low, given the current funding position of
the Account.
Figure 3: Long-term projected Earners’ Account levy rates and funding ratios allowing for the levy rate
prescribed in the Accident Compensation (Earners’ Levy) Regulations 2017
Changes Since 31 March 2016
At 31 December 2016 the funding ratios for both Accounts were close to those forecast using 31 March 2016
assumptions. The actual and expected funding ratios are shown in Figure 4 below.
Figure 4: Work and Earners’ Accounts—expected and actual funding ratios
| Funding ratio (31 December 2016 as projected at 31 March 2016) | Actual funding ratio (31 December 2016) |
|---|---|
| Work Account 123% | 125% |
| Earners’ Account 123% | 122% |
The difference between these expected and actual funding ratios will have an immaterial impact on future levy
requirements.
Conclusion
The levy rates recommended by the Board to the Minister for ACC were consistent with the funding policy.
Cabinet has set the Earners’ Account levy at a rate lower than that recommended by the Board. As a result, all
else being equal, future recommended levy rates will be higher than would otherwise have been the case in order
to meet the funding target set out in the funding policy. Recommended rates in the next levy round are expected
to increase significantly and then increase gradually over time.
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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
(continued from previous page)
🏥 Health & Social WelfareAccident Compensation, Levy rates, Work Account, Earners' Account, Financial projections