The Accident Compensation Corporation has reported a massive
surplus of $4.9 billion, which will give the Government's
books an extra $324 million boost.
Speaking at the release of its annual report, ACC chairwoman
Paula Rebstock said the net surplus was $3.6b ahead of budget
and would allow the corporation to reduce the deficit between
its assets and the lifetime cost of every claim on its books
from $7.2b to $2.3b.
Ms Rebstock said the surplus was mainly due to three
- Better performance by its rehabilitation services returning
claimants to fitness, which reduced estimated future costs by
- Rising interest rates which reduced the current value of
future costs by $1.2b
- Investments generating $920m more than predicted due to
recoveries in local and overseas markets and the performance
of its investment team.
Chief financial officer Mark Dossor said the corporation's
investment fund returned 9.9 per cent, or $2b in investment
income _ almost twice above budget. The total investment fund
now stood at $24.6b.
ACC's surplus will flow through the Government's finances,
although investment gains and changes to its outstanding
claims liability are excluded.
Mr Dossor said ACC had expected to contribute $1.12b to the
Government's operating balance excluding gains and losses but
the actual sum would be $1.44b, $324m ahead of budget.
Chief executive Scott Pickering said ACC's surplus meant the
corporation was on track to meet its objective of becoming
financially sustainable or fully-funded by 2019.
ACC is moving from a pay as you go system, where the cost of
claims for each year are met from levies collected that year,
to a full funding model where it has sufficient reserves to
meet the lifetime cost of all current claims.
The corporation's earners and work accounts had recently
reached that point and the motor vehicle account was close,
Mr Pickering said.
"ACC's financial position is now in the best shape it's ever
The corporation's strong financial position was also allowing
it to "invest substantially in the business to position it
for the future''.
Over the year ahead ACC would increase spending on injury
prevention, "and we will continue to drive to improve quality
of customer service and rehabilitation activity''.
Mr Pickering replaced Ralph Stewart, who resigned late last
year in the fallout from the scandal around a blunder that
saw thousands of clients' details mistakenly sent to
disgruntled claimant Bronwyn Pullar.
Mr Pickering said privacy had been the corporation's number
one priority since then.
"We've absolutely acknowledged the need to improve the way we
protect client information. We need to get it right if we're
to rebuild public trust and confidence.''
The corporation had put in place a range of measures
including appointing a chief privacy officer, and the number
of breaches continued to decline below target levels.
"But we accept there is still work to do.''
By the end of June the corporation had implemented 15 of the
22 short-term recommendations from a privacy review conducted
following the Pullar debacle. It expected to implement 37 of
the total 44 recommendations by the end of the current year.
Ms Rebstock said ACC's strong performance gave the Government
"confidence to signal that it believes decreases in ACC
levies in 2104 and 2015, and again in 2015-16 are
"That is great news for all New Zealanders, particularly as
it follows a reduction in levies which has led to households
and businesses paying $253 million less in 2012-13.''
The Government rejected ACC's recommendation to cut levies by
hundreds of millions of dollars in the 2013-14 year but said
earlier this year that levies could fall by $300m in 2014-15.
ACC however, is currently consulting on its initial
recommendation of a $520m cut.
ACC's 2012-13 year by the numbers:
# $4.9b surplus
# 1.72m new claims lodged
# $2.24b paid out on all active claims
# There were 207,000 work related injuries costing
# Operating costs were $8m under budget
- By Adam Bennett