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The Government will not return the Accident Compensation Corporation to a pay-as-you-go funding model, ACC Minister Judith Collins has confirmed today.
“Some ACC claimants remain with ACC for anywhere up to 80 years. It would be irresponsible to leave future generations of New Zealanders to pay for claims that happen today as well as the cost of their own injuries,” Ms Collins says.
“While pay-as-you-go funding may look more attractive in the short term, in the long run, it becomes more expensive as future levy payers are required to pay more and more to cover a backlog of injuries.”
Full funding requires ACC to set levies today that will cover the full future cost of each claim.
Ms Collins said the Government is considering whether the current settings for full-funding are working well, including the issues of fairness between generations and costs on levy payers.
During last year’s ACC levy setting process, Cabinet agreed to review the funding policy for the ACC accounts and the reasons for the fluctuations in the projections of the ACC’s accounts. The Government will examine the stability of the scheme, good process for levy setting and the impact on the economy.
“The Government must consider the wider issues of funding the ACC scheme, including the interests of taxpayers, levy payers, claimants and future generations.”
“It is widely expected that there will always be volatility in a long-tail insurance scheme. However, the Government is committed to ensuring ACC is sustainable into the future and that it can meet its obligations to levy payers and to claimants.” Ms Collins says.