Income Insurance Scheme

The Labour Government has introduced and passed law under urgency to create the new statutory income insurance scheme. This will be mandatory, and we will all be paying for it if we receive employment income.

Details are as follows:

  • The scheme will provide employees (and those in other working arrangements) with up to 80% of their previous income (capped at $130,911) for up to 6 months following loss of employment due to redundancy or loss of capacity to work due to a health condition or disability.
  • Where an employee is made redundant, their employer will need to give 4 weeks' notice and make a “bridging payment" of 80% of the employee's wages during the notice period. Payments under the scheme will begin after the end of the notice period.
  • Employees will be able to earn up to 20% of their previous income, without abatement of payments made under the scheme.
  • The costs of the scheme will be funded by levies on wages and salaries, with both employees and employers paying an estimated 1.39% each.
  • The levy will apply on income up to $130,911 and for employees will be collected through the PAYE system. The employer levy will be collected by ACC which will also manage the scheme. The scheme would operate 2 funds to meet claims: one for loss of employment claims and the other for health and disability claims.
  • To be eligible, employees will need to contribute for at least 6 months in the previous 18 months preceding a claim.
  • Claimants under the scheme will need to seek new employment, re-train or undertake rehabilitation and remain in New Zealand.

ACC plan to start work on developing a scheme according to Minister for ACC Carmel Sepuloni. This is expected to be in place by 2025.


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