ACC levy changes to ensure financial sustainability
Key aspects of the ACC levies for 2022/23, 2023/24 and 2024/25 include:
- Average Work levies paid by employers and self-employed people will decrease from 67 cents to 63 cents per $100 of liable earnings in April, and remain at this rate until 2025.
- Average Motor Vehicle levies, which include the annual license levy and petrol levy, will remain at $113.94. Electric vehicles will continue to receive a subsidised levy.
- Earners’ levies paid through PAYE (or invoiced directly through ACC for self-employed people) will increase from $1.21 per $100 to $1.27 next April, $1.33 in 2023 and $1.39 in 2024.
Minister for ACC Carmel Sepuloni has today announced new levy rates for ACC which will see the average Work levy decrease, the average Motor Vehicle levy held and a small increase to the Earners levy.
“ACC is a unique and world leading no fault insurance scheme, and the Government is committed to ensuring it remains financially sustainable and able to meet the future costs of injury claims,” Carmel Sepuloni said.
“To fund the scheme ACC collects levies and allocates them into three separate accounts. A separate Non-Earners account, is funded directly by the Government.
“While each of the levied Accounts are reporting surplus funds, levies are currently set $1.39 billion below the projected costs of new injuries each year. We need to make some small changes now, in order to avoid larger ACC levies in the future.
“We will use ACC’s surpluses in the Work and Motor Vehicle accounts to ensure they remain in a strong financial position without raising costs.
“However, the Earners’ account is facing greater cost pressures, due to larger numbers of sensitive claims and higher than expected average costs for serious injury care claims. Over the next three years, ACC expects that the cost of supporting people to recover from injuries will increase by 4-6 percent each year so it is important we prepare for that now.
“Overall Cabinet has agreed to reduce the levies paid by businesses, maintain current average levies for motor vehicles, and introduce small increases of $0.06 each year for three years, for every $100 of income that workers earn.
“In deciding these levies, we have carefully balanced the need to ensure ACC can continue to meet the lifetime cost of claims, while ensuring future generations of New Zealanders are able to receive cover from ACC. In particular, we’ve considered the impact of COVID-19.
“The Earners account is ACC’s largest and it is important we ensure it remains sufficiently funded. We will be introducing the increase gradually over the next three years. The first increase will come into effect on 1 April 2022,” Carmel Sepuloni said.
Levy changes were publicly consulted on between 1 September and 5 October.