Media Release

16 April 2010

ACC To Refund Some Clients

Background

ACC pays weekly income compensation to injured workers. From these compensation payments ACC deducts both PAYE and the ACC earners’ levy. The earners’ levy insures the person against non-work injuries.

If a worker dies as the result of their injury the weekly compensation can be paid to any dependants.

Issue

During a recent Court case, ACC recognised that it should not be deducting the earners’ levy from weekly compensation paid to the dependants of fatally injured workers. This was because the worker was deceased and so did not need ACC cover.

Amount of the deductions

ACC has been deducting an earners’ levy from the weekly compensation paid to the dependants of fatally injured workers since 1992.

Over the years, the amount of earners’ levy deducted has averaged about 1% of the weekly compensation payments made. For example:

• In 1992 the earners’ levy that was deducted from weekly compensation, based on the average wage, was $3.19 from a gross weekly payment of $457.

• In 2001 the earners’ levy that was deducted from weekly compensation, based on the average wage, was $6.20 from a gross weekly payment of $564.

• In 2009 the earners’ levy that was deducted from weekly compensation, based on the average wage, was $12.98 from a gross weekly payment of $764.

ACC response

“Following the Court case, which was about a specific individual, ACC stopped deducting the earners’ levy in all such situations and will reimburse the money that has been deducted to date, plus interest”, said Dr Jan White, ACC Chief Executive.

ACC stopped making these deductions from 1 April 2010 for current clients.

Scale of the issue

Since 1992 there have been about 7580 cases where a person has died as the result of an injury and their dependants have received weekly compensation. About 16,000 dependants are involved.

Approximately $12 million in earners’ levy has been deducted from their payments. That equates to about 1% of the money they received. ACC will refund that money, plus interest, taking the total refund to about $19 million.

To give this amount some context, ACC collected $10.8 billion in total earners levies over the same period.

Comment

“While this occurred because of a genuine interpretation of our legislation, and the amounts involved were very small per family per week, we still apologise to the people concerned.”

Organising refunds

ACC will be writing to those affected over the coming weeks. If people think they may be affected but have not heard from ACC within four weeks they should contact us directly.

QUESTIONS AND ANSWERS FOLLOW

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Questions and Answers

1. Who is affected – past and present?

Clients who received weekly compensation payments as the dependant/s of a person who was fatally injured, between 1 July 1992 and 1 April 2010.

2. Why did ACC previously think it should be deducting this money?

ACC deducted the levy in good faith. We believed we were interpreting the legislation correctly.

3. How could this happen?

The Court noted that the legislation was unclear, and ACC believed the earners’ levy was deductible from all weekly compensation payments.

4. Will the Government change ACC legislation to make this situation clearer?

No, the Court ruling has clarified the situation.

5. How many people are affected?

Since 1992 there have been about 7580 cases where a person has died as the result of an injury and their dependants have received weekly compensation. About 16,000 dependants are involved over that 18 year timeframe.

6. How much will they get?

The average refund is $1,250 (including interest). The largest is $14,000 (including interest).

7. How are you tracking down affected people and can you be sure you’ll get everyone?

We’re writing to all affected clients using the latest contact details we have for them, and also placing public notices. The publicity should also alert some to this issue.

8. What should people do if they think they might be affected by this?

We are writing to all affected people. If they have not heard from us within four weeks they should call us on 0800 101 996.

9. Does ACC apologise to the families concerned?

Yes. While this situation occurred as the result of a genuine interpretation of our legislation we still offer an apology to the people concerned.

10. Whose fault is this and will someone be held accountable?

ACC made the error but deducted the levy in good faith and believed we were correctly interpreting the legislation.

11. What happens if an eligible person has since died? Who gets the money?

The money is payable to the estate of the deceased person.

ENDS

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