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New Zealand’s Social Assistance System: Financial Incentives to Work - WP 03/18

Appendix 1: New Zealand’s Social Assistance System

New Zealand’s Three-Tiered Social Assistance System
Tier One: Main Benefits
Programme Entitlement Criteria Abatement Regime
Programme Entitlement Criteria Abatement Regime
Tier One: Main Benefits
Domestic Purposes Benefit: Care for Sick and Infirm Provides income support to people who care for people who need constant care at home.  Must be aged 16 and over and caring full-time for someone who would have to be in hospital if applicant was not looking after them (this person cannot be the applicant’s partner or dependant child). Every dollar of non-benefit taxable family income between $80 and $180 reduces the net benefit by 30 cents and every dollar of non-benefit taxable income above $180 reduces the net benefit by 70 cents.
Domestic Purposes Benefit: Sole Parent Provides income support to parents who, without the support of their partners, care for children.  Must be 18 or over (or 16 or over if having been legally married), the sole caregiver of a dependant child under 18, a resident of New Zealand, and have been resident for at least two years.  If the dependent child is born outside New Zealand the residency requirements increases to between three to ten years, depending on circumstances. Subject to the same regime as that applying to the Domestic Purposes Benefit: Care for Sick and Infirm.
Domestic Purposes Benefit: Woman Alone Provides income support to older women who are alone.  Must be aged 50 or over, a resident of New Zealand, and have become alone after 50.  Must also either have cared for a dependant child for at least 15 years, or cared full-time for a sick or frail relative for at least five years, or been previously supported by a partner for at least five years. Subject to the same regime as that applying to the Domestic Purposes Benefit: Care for Sick and Infirm.
Invalids’ Benefit Provides income support to people permanently and severely restricted in their capacity for work because of a sickness, injury, or disability.  Must be aged 16 and over, either permanently and severely restricted in the capacity to work for a minimum of two years or permanently blind, a legal resident of New Zealand, and have been resident for at least ten years.  Every dollar of non-benefit taxable family income between $80 and $180 reduces the net benefit by 30 cents.  Every dollar of non-benefit taxable income above $180 reduces the net benefit by 70 cents.
New Zealand Superannuation Provides a retirement income to people once they reach the qualifying age.  Must be 65 or over, a New Zealand citizen or permanent resident, and have lived in New Zealand for a total of ten years since turning 20 and a total of five years since turning 50.  A partner of a qualifying recipient may receive a payment even if he or she does not qualify for his or her own New Zealand Superannuation, this payment will be at the lower non-qualifying spouse rate, however. No income or means test unless the recipient’s partner receives a non-qualifying spouse payment.  The non-qualifying spouse payment is subject to the same regime as the Unemployment Benefit.
Orphans’ and Unsupported Childs’ Benefits Provides income support to the main caregivers of children whose parents cannot care for them.  The child must be under 18, single, and financially dependent on the caregiver. The caregiver must be 18 or over, the main caregiver of the child, expect to care for the child for 12 months or more, not be the child’s natural or adoptive parent, and not be a professional caregiver or childcare organisation. The payment neither abates against the caregiver’s income nor the ‘active’ income of the child (money from working).  The payment abates against the child’s ‘passive’ income (income from their parents’ estate, a family trust, investments, or regular insurance payments).  Above an income limit (between $1,988 and $2,841 gross per annum depending on the child’s age) the benefit abates dollar for dollar.
Sickness Benefit Provides income support for people who are unable to work due to sickness, illness, or pregnancy.  Must be aged 18 or over (or aged 16 or over if living with a partner and dependent child), unable to work temporarily because of sickness, injury, or pregnancy (if more than 26 weeks pregnant), a legal resident of New Zealand, and have been resident for at least two years. Subject to the same regime as the Unemployment Benefit.
Transitional Retirement Benefit Provides income support to people who are retired or have low incomes and who have not yet reached the qualifying age for New Zealand Superannuation.  Must be have reached the qualifying age (was 64.5 at 1 April 2003 but increasing to reach 65 by 1 April 2004), have lived in New Zealand for a total of ten years since turning 20 and a total of five years since turning 50. Subject to the same regime as the Unemployment Benefit.
Unemployment Benefit Provides income support for people who are looking for work or training for work.  Must be aged 18 or over (or aged 16 or over if living with a partner and dependent child), unemployed, actively seeking work or undertaking an approved work-related training course, a legal resident of New Zealand, and have been resident for at least two years. Every dollar of non-benefit taxable family income above $80 per week reduces the net benefit income by 70 cents.
War and Veterans’ Pensions War and Veterans’ pensions are for ex-service people with a disability from their service. There are four War and Veterans’ Pensions: the War Disablement Pension, Surviving Spouse Pension, Veterans’ Pension, and Special Allowances. No income or means test except for Veterans’ pension recipients with partners under the New Zealand Superannuation qualifying age.  For the Veterans’ Pension, a recipient with a spouse under this age can either decide not to include the spouse in the pension (half of the married rate will be paid free of any income test) or to include the spouse (the pension will be income-tested and every dollar of joint income above $4,160 per year will reduce the pension by 70 cents).
Widows’ Benefit Provides income support to women who have had a husband or partner die.  Must be aged 16 and over, a woman whose husband or partner has died, and a resident of New Zealand.  Must also be either the caregiver of a dependant child, or have been married for at least 15 years and have had children, or had a dependant child for at least 15 years while married or widowed, or have been married for at least five years and widowed after the age of 50, or be over 50 and have been married for ten years and widowed after the age of 40.  The benefit is only available to those people who do not remarry or find a new partner. Subject to the same regime as that applying to the Domestic Purposes Benefit: Sole Parent.
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