To receive a benefit, a client’s income from other sources must be below a prescribed level. This level depends on:
To determine when the client will begin receiving a benefit, Work and Income assesses the client’s income earned in the previous six months.
In addition, clients receiving income-tested assistance have their income from other sources monitored. Payments of income-tested assistance are reduced (‘abated’) when income from other sources exceeds a certain level.
A client is subject to an income test if they are:
Unsupported Child’s Benefit and Orphan’s Benefit are tested on the incomes (other than personal earnings) of the children for whom these benefits are paid.
Income is defined in section 3 of the Social Security Act 1964 as any money received (before income tax) that is not a one-off capital payment. It includes, for example:
Whether or not money received is taxed is irrelevant to identifying it as income. Income can also refer to a value in money’s worth rather than money itself. For example, where another person is meeting expenses such as rent for the client, this can be considered as income. The value of free board or free rent is also considered as income.
When a client’s New Zealand Superannuation, pension or benefit is not income tested, they may receive other income without their New Zealand Superannuation, pension or benefit being affected.
Clients receiving income-tested assistance are allowed to receive some income in addition to their benefit. Any additional income received must be declared to Work and Income.
There are two ways Work and Income treats additional income received by beneficiaries who are subject to an income test. These are:
Since September 2010, clients receiving an Invalid’s Benefit, a Widow’s Benefit or a Domestic Purposes Benefit have been able to receive up to $100 a week (before tax) in other income before their benefit payments are affected. Clients receiving an Unemployment Benefit, other unemployment-associated benefits or a Sickness Benefit can receive up to $80 a week (before tax).
Special conditions apply for people receiving an Invalid’s Benefit because of blindness. People with a severe disability can have some or all of their personal earnings exempted from an income test.
For each dollar of income above these amounts:
Unemployment Benefits, other unemployment-associated benefits and Sickness Benefits are reduced by 70c for any income over $80 a week (before tax).
The lower abatement rate for Domestic Purposes Benefits, Widow’s Benefit and Invalid’s Benefit gives recipients of these benefits an incentive to take up part-time employment. It recognises these clients may have less opportunity to take up full-time employment (eg because of caring responsibilities or health issues).
The assessment period for the income test is:
The main benefits for which income is assessed weekly are:
Clients receiving a benefit for which income is assessed annually can choose to have a weekly income assessment instead.
People aged 65 or over and receiving New Zealand Superannuation or a Veteran’s Pension are only income tested if a non-qualified spouse is included in their payment.
All Veteran’s Pension recipients aged less than 65 are subject to an income test.
Some supplementary benefits (eg Accommodation Supplement) are reduced when people receive other income. This can occur even if clients are receiving a pension or a main benefit that is not income tested.
From 1 October 2004, people receiving both a main benefit and an Accommodation Supplement have not had their Accommodation Supplement income tested. If these clients continue receiving an Accommodation Supplement after entering paid work, they are liable to have that supplement income tested.
Work-tested clients are required to:
Details of the work testing currently applied to each benefit are outlined in the relevant sections.
Depending on their circumstances, a client receiving a work-tested benefit may be subject to:
Clients subject to full-time or part-time work tests may be required to register as jobseekers, and to take reasonable steps to obtain work.
Other activities such as training, work experience, attending job interviews or planning for employment may be required on a case-by-case basis.
Any work or training being undertaken may be counted towards fulfilling a client’s obligations under the work test. This is regardless of whether the work or training began before or after the client became subject to a work test.
Clients may be exempted from the work test on a range of grounds, including health issues and caring responsibilities.
From September 2010, clients who are not full-time or part-time work tested are obliged to meet employment planning obligations if required to by their case manager.
Meeting employment planning obligations involves:
Employment Plans are required to include:
The employment planning process involves the development and implementation of a plan for the individual client. The planning process involves:
The assessment of the client’s circumstances, strengths and needs aims to identify:
The plan is developed in discussion between the client and the case manager. Once the client has signed it, the plan forms part of the case management approach for that client.
Between July 2001 and September 2010, all work-tested clients were required to enter into Job Seeker Agreements with Work and Income. A Job Seeker Agreement set out the assistance Work and Income would provide to help the jobseeker to obtain employment, and the steps the jobseeker would take to find employment or to improve their prospects for doing so. The Job Seeker Agreement had to specify job search activities, and may have included employment or training programmes to be undertaken by the jobseeker (eg a period of work experience or employment-related training).
Between March 2003 and September 2010, clients receiving a Widow’s Benefit or some Domestic Purposes Benefits were obliged to meet the requirements of the Personal Development and Employment Plan process if required to by their case manager.
Between September 2007 and September 2010, clients receiving Sickness Benefits or an Invalid’s Benefit were also required to meet the requirements of the Personal Development and Employment Plan process if required to by their case manager.
For details about the Personal Development and Employment Plan, see The Statistical Report for the year ending June 2010.
Work-test obligations for a number of benefits were changed in September 2007. For information on work testing before September 2007, see The Statistical Report for the year ending June 2010.