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On 1 April the first of a series of ACC levy cuts will kick in, returning an estimated $480 million to the New Zealand economy – and kiwis’ wallets. From 1 April 2015 the Work account levy paid by businesses will decrease by an average of 5% This levy covers workplace injuries. From 1 July 2015 the Motor Vehicle levy paid when people register or renew their rego will go down by an average of 41%. The specific amount will be determined by a new risk rating applied to different types of vehicles. The petrol levy kiwis pay at the pump will also go down by 3 cents per litre on 1 July – from 9.90 cents to 6.90 cents per litre. These levy reductions are the result of the Corporation’s strong financial management and sound investments. This has also enabled the Scheme to be fully funded, which means that we’ve collected – and saved – enough in levies to fund the lifetime cost of every current ACC claim. This is the second year in a row that ACC has been able to reduce its levies. For more information on the levy reductions visit ACC collects different types of levies, to help pay for the cost of injuries that happen in different situations. For example:

  • a work levy is paid by employers and self-employed people, to help cover the costs of work-related injuries
  • an earners’ levy is paid by everyone in the paid workforce, to help cover the costs of earners’ out-of-work injuries
  • motor vehicle levies are paid by vehicle owners, and a petrol levy is included in the cost of petrol bought at the pump, to help cover the costs of injuries involving a moving motor vehicle on a public road.

Why does ACC have investments?

Each year, ACC is required to collect enough funds, via levies, to meet the lifetime costs of all claims received that year. Money not needed immediately is invested, and the interest earned helps meet the future costs of existing claims.

Levy rates and injury risk

Where practical, levy rates reflect the risk and cost of injury, eg:
  • the work levy paid by employers reflects the risk and cost of injuries associated with their particular industry – this is fairer, because those in riskier industries, which generate more claims costs, pay proportionately more than those in less risky industries
  • motor vehicle levies are set at different rates for different classes of vehicle, to reflect the different injury risks/costs associated with each vehicle class
  • the work levy paid by employers may also be adjusted because of ‘experience rating’ (see below).

What is experience rating, and how does it work?

  • the base work levy paid by employers reflects the injury risk/costs of their particular industry, eg the construction industry pays a higher levy rate than bookbinders
  • under experience rating, the claims experience of employers within a particular industry is compared, and those with a better performance (eg, fewer claims) than their industry peers may receive a levy discount, while those with a poorer performance may receive a levy loading
  • the final work levy paid therefore reflects both the safety performance of your industry compared to other industries, as well as your performance compared to others in your industry.

If ACC is a ‘no fault’ Scheme, why do some people pay higher levies?

  • ‘no fault’ refers to the fact that you’re covered by ACC, no matter whether it was something you did, or someone else did, that caused your injury
  • the issue of ‘fault’ is different to ‘risk’ – where practical, levy rates are set so they reflect the risk and costs of injury, relevant to the individual levy payer.
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