How we're funded: The five ACC accounts

The money we need to provide our services comes from levies on people’s earnings, businesses’ payrolls, petrol and fees from vehicle licensing, as well as Government funding. When working out how much money to collect through levies, we balance the likely cost of claims against the need to keep levies fair and stable. We distribute the money collected into one of five ACC Accounts, each Account covering a specific group of injuries.

Fully funded claim costs

Until 1999, ACC operated under a ‘pay-as-you-go’ basis, collecting only enough levies each year to cover the cost of claims for that particular year. In 1999 the Government decided to change ACC from ‘pay-as-you-go’ to a ‘fully funded’ way of operating. That means we now collect enough money during each levy year to cover the full lifetime costs of every claim that occurs in that year.

Some people who are injured need ACC’s help for 30 years or more, so significant reserves must be built up to fund these future costs. This money is invested and earns interest that helps pay the cost of claims.

This fully funded model is fairer for levy payers. Future generations of levy payers won’t be paying for injuries that happened years before as the cost of those claims will already have been collected.

Work Account

This account covers claims for all work-related injuries.

As a result of the legislative changes to the Accident Compensation Act in 2010, the Work Account and the Residual Claims Account were merged. Levy payers now pay a ‘current portion of the Work Account’ (previously know as the Work Account levies) and a ‘residual portion of the Work Account’ (previously know as the Residual Claims Account).

The current portion of the Work Account is based on your payroll or liable earnings, as well as the level of risk and cost of injuries associated with the particular industry you work in.

The residual portion of the Work Account levies covers claims for work injuries that happened before 1 July 1999, and non-work injuries prior to 1 July 1992 that are still being managed. This happened because under the original ‘pay-as-you-go’ way of funding, we collected only enough money to cover injury costs in that particular year.

Earners’ Account

Levies are paid to the Earners’ Account by everyone in the paid workforce. If you’re an employee, your earner’s levy is deducted from your gross pay along with your PAYE tax. If you’re self-employed, we send you an invoice.

This account covers claims for people in paid employment who are injured outside of work, eg on the sports field or at home, unless the injury is related to a motor vehicle accident on a public road (these injuries are covered by the Motor Vehicle Account).

Non-Earners’ Account

The Non-Earners’ Account is funded by the Government, using money collected from general taxation.

This account covers claims for injuries to people who are not in the paid workforce, such as students, beneficiaries, retired people and children, unless the injury is related to a motor vehicle accident on a public road (these injuries are covered by the Motor Vehicle Account).

Residual pre-1999 claim levies

The residual portion of the Work Account levies covers claims for work injuries that happened before 1 July 1999, and non-work injuries prior to 1 July 1992 that are still being managed. This happened because under the original ‘pay-as-you-go’ way of funding, we collected only enough money to cover injury costs in that particular year.

Motor Vehicle Account

The Motor Vehicle Account is funded by a levy included in the price of petrol and the motor vehicle licensing fee.

This account covers claims for all injuries involving motor vehicles on public roads in New Zealand.

Treatment Injury Account

This account covers claims for treatment injuries, ie injuries connected with the medical treatment you are receiving.

The funds in this account are drawn from the Earners’ Account and Non-Earners’ Account. The Earners’ Account funds are used to meet the treatment injury costs of people in employment, the Non-Earners’ Account funds are used to meet the treatment injury costs of people not in the workforce.

Before 1 July 2005, these injuries and the Account were referred to as Medical Misadventure.

Last updated: 16 January 2014

Last reviewed: 19 December 2013