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ACC Levy Increases Proposed: What You Need to Know

Writer's picture: Lewis Price-MilneLewis Price-Milne

The Accident Compensation Corporation (ACC) has proposed levy increases for workers, businesses, and motorists over the next three years. The changes are aimed at addressing rising injury costs, declining rehabilitation rates, and a funding shortfall in the scheme.

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ACC Minister Matt Doocey has acknowledged concerns about the impact on households and businesses but says the increases are necessary. “ACC provides critical support to New Zealanders in times of need, but I am concerned that ACC’s performance has been declining for a decade. Rehabilitation rates are down, weekly compensation costs are up, and average costs per claim are up,” Doocey said.


Why Are ACC Levies Being Reviewed?

ACC operates on a "fully funded" model, meaning levies collected must cover the forecasted cost of claims. However, ACC has reported a financial shortfall of between $1 billion and $2 billion, with the scheme currently spending $2 billion more than it collects each year.


According to ACC Chief Executive Megan Main, levies have not kept pace with increasing costs. “The levies we currently collect are lower than they need to be to cover the forecast cost of claims we expect each year,” she said.


ACC has also cited a decline in rehabilitation performance, meaning injured New Zealanders are taking longer to recover and return to work. The Government has launched a review into ACC’s performance, with Doocey stating: “It will look at whether ACC has the right interventions and settings in place to support accident claimants to return to independence as quickly as possible.”


Proposed Levy Increases

The proposed increases would apply to all major levy groups:


Earners and Workers

  • The earners’ levy, paid as a percentage of wages, would increase from $1.39 per $100 earned to $1.59 per $100 earned by 2028.

  • For someone earning $70,000 per year, the ACC levy would increase by $140 annually over the next three years.


Businesses

  • The work levy, paid by employers, would rise from $0.63 per $100 of payroll to $0.72 per $100 of payroll by 2028.

  • A medium-sized business could pay up to $10 more per week in levies.


Motor Vehicle Levies

  • Petrol vehicle owners would see the annual ACC levy rise from $42.09 to $64.26 over three years.

  • Electric vehicle (EV) owners would see a steeper increase, with levies rising from $42.09 to $122.24 by 2028.

  • Motorcyclists (with bikes over 500cc) would see levies rise from $297.71 to $532.89 by 2028.

  • Discounts would be available for motorcyclists who complete safety training courses.


Doocey has acknowledged concerns about affordability. “The Government’s expectation has been made clear to ACC that it must deliver greater value for the funds it receives. I am monitoring this very closely and will be ensuring ACC is improving its financial performance,” he said.


The Government has also directed ACC to review its rehabilitation strategies to improve claimant recovery times.


What Happens Next?

The first stage of increases, if approved, will take effect from mid-2025.


Doocey has stated that cost-of-living pressures will be taken into account before any final levy changes are confirmed. “It is my expectation ACC will look at existing costs within the scheme to ensure that any levy increase is absolutely justified before final decisions are made.”


For more details on the ACC levy review, visit:

If you're considering how ACC fits into your personal financial planning, explore your insurance options here.


 

The information in this article is general information only and is not intended as financial, medical, health, nutritional, tax or other advice. It does not take into account any individual’s personal situation or needs. You should consider obtaining professional advice from a financial adviser and/or tax specialist, or medical or health practitioner, in relation to your own circumstances and before acting on this information.

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