✨ ACC Levy Rates and Financial Analysis
NEW ZEALAND GAZETTE, No. 22 — 2 MARCH 2017
| 2027/28 | 71,955 | 26.44 | 2,721 | 169 | 5.5% | 4.1% |
| 2028/29 | 72,349 | 26.44 | 2,736 | 174 | 5.5% | 4.1% |
The following table compares the components of the 2017/19 prescribed average levy rate with those of the 2016/17 rate. The first column shows the components of the 2016/17 prescribed levy rate derived for the 2016/17 levy consultation. The second column shows how the estimates of new-year claim costs and administration costs for the same year differ when calculated using the revised assumptions used for the 2017/19 levy period. The third column then shows how these costs have changed for the new levy period.
Trend in Underlying Costs
Levy per $100 liable earnings
Earners’ portion only:
| Initial 2016/17 (last year’s assessment) | Current 2016/17 (this year’s assessment) | Prescribed 2017/19 levy rate | |
|---|---|---|---|
| To fund the cost of new claims during the new levy year | $1.04 | $1.07 | $1.11 |
| To fund administration costs | $0.18 | $0.18 | $0.18 |
| Funding adjustment | -$0.11 | -$0.19 |
Earners’ portion of Treatment Injury:
| Initial 2016/17 (last year’s assessment) | Current 2016/17 (this year’s assessment) | Prescribed 2017/19 levy rate | |
|---|---|---|---|
| To fund the cost of new claims during the new levy year and administration costs | $0.11 | $0.12 | $0.12 |
| Funding adjustment | -$0.01 | -$0.01 |
Total Earners’ Levy rate | $1.21 | $1.21 | $1.21 |
The estimate of claim costs for 2016/17 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. 2017/19 claim costs are projected to increase compared with the 2016/17 estimate because of medical and rehabilitation cost inflation (above the Labour Cost Index (LCI)). Allowance has also been made for a projected increase in claim numbers above population growth.
Appendix C: Explanatory Notes
Funding Adjustment
This is the adjustment to levy rates which is 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 claim costs (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 funding target is a funding ratio of 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 Claim Costs
Claims that occur during a new levy year. New-year claim costs are the net present value of 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.
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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, Claim costs, Funding adjustment, Funding ratio, Funding target, Investment returns, Labour Cost Index, New-year claim costs, Outstanding claims liability