Invalid's Benefit

Overview

An Invalid's Benefit is available to people who are 16 years or over and are either:

• permanently and severely restricted in their capacity for work because of sickness, injury or disability, or
• totally blind.

A "permanent and severe" restriction is defined in the Social Security Act 1964 as one that:

• is expected to last at least two years, or that is terminal and the client is not expected to live for more than two years
• means the client can't regularly work more than 15 hours per week in open employment.

A residential qualification and an income test must be met in order to receive an Invalid's Benefit.

Clients receiving an Invalid's Benefit because of their own incapacity may be required to fulfil the demands of the Personal Development and Employment planning process. Clients may be exempted from this requirement if it would be inappropriate for them to be required to participate in planning.

Between October 1998 and September 2007, the partners and spouses of people receiving an Invalid's Benefit were subject to:

• a full-time work test if the couple had no dependent children or if their youngest dependent child was aged 14 years or over
• a part-time work test if the couple's youngest dependent child was aged 6-13 years
• a requirement to attend an annual planning interview with a Work and Income case manager if the couple's youngest dependent child was aged under six years (the aim of this interview was to plan their entry into paid work once their youngest dependent child turned six years of age).

Over this period, partners and spouses of people receiving an Invalid's Benefit could be exempted from the work test on a range of grounds, including health issues and caring responsibilities.

From 1 July 2004, the rules surrounding eligibility for an Invalid's Benefit were modified, in order to support recipients who wished to try undertaking paid work. These changes allowed:

• Invalid's Benefit recipients to work 15 hours per week or more, for a period of up to six months, without losing entitlement to their benefit (clients wishing to take up this opportunity must agree the period involved in advance with their case manager)
• clients who must stop work and reapply for an Invalid's Benefit due to the same illness, disability or injury to be exempted from an automatic stand-down period before they resume receiving a benefit (like all other benefit recipients, these clients may, however, be subject to a stand-down period if they have high earnings from their employment).

From September 2007, spouses and partners of recipients of an Invalid's Benefit were subject to:

• a full-time work test if they had no dependent children, or if their youngest dependent child was aged 18 or over (unless that child was aged 18 years and engaged in full-time education or training)
• a part-time work test if their youngest child was aged 6-17 years, or was aged 18 years and engaged in full-time education or training.

Partners or spouses don't have work test requirements if the couple's youngest dependent child is aged under six years. However, these partners or spouses are obliged to engage with the Personal Development and Employment planning process if required.

During the 2003/2004 financial year, work-tested clients had Government expectations about meeting the work test made clearer. Other work-test requirements added during the 2003/2004 financial year included a requirement to:

• take pre-employment drug tests if required to by a prospective employer (from October 2003)
• commute to seek and undertake paid work if there is no such work available in their local area (from March 2004).

Several changes to the administration of Invalid's Benefits were introduced during the last year. Residency requirements for an Invalid's Benefit were reduced from July 2007. From September 2007, further changes were introduced which were aimed at ensuring that clients were receiving a benefit most appropriate to their needs. These changes included:

• a requirement for more medical information on medical certificates
• allowing case managers to make the decision about whether clients should receive a sickness-related benefit, Invalid's Benefit or other assistance based on medical information provided, discussion with the client, and other relevant assessments.

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Trends in the number of clients receiving an Invalid's Benefit

Increases since 2004 in the number of clients receiving an Invalid's Benefit have accelerated in the last year (see table 3.23). This acceleration reflects the changes in administration of sickness-related benefits from September 2007 outlined immediately above, which have led to a temporary acceleration in growth in Invalid's Benefit numbers. The persistent slow increases in numbers receiving Invalid's Benefits (which arise from the long-term nature of the conditions that result in people being granted these benefits) continued over the last year.

Of the working age Invalid's Benefits recipients since 2004:

• around 37% were aged between 40-54 years, while between 32% and 35% were aged between 55-64 years (see table 3.23)
• around 39% had a systemic disorder, while around 27% had a psychological or psychiatric condition and around 14% had an intellectual disability (see table 3.24).

Table 3.23 Trends in the ages of clients receiving an Invalid's Benefit

Age of client at the end of June	2004 Number	2005 Number	2006 Number	2007 Number		2008 Number
	Working age clients receiving an Invalid's Benefit1
18-19 years	1,367	1,480	1,566		1,643		1,756
20-24 years	3,710	3,793	3,890		3,949		4,192
25-29 years	4,025	4,076	4,047		4,119		4,319
30-34 years	5,670	5,585	5,376		5,206		5,210
35-39 years	6,957	6,939	7,123		7,160		7,414
40-44 years	8,417	8,687	8,829		8,726		9,024
45-49 years	8,559	9,070	9,522		9,985		10,855
50-54 years	9,345	9,794	10,160		10,599		11,427
55-59 years	10,835	11,366	11,948		12,253		12,979
60-64 years	11,922	12,396	12,888		13,661		15,703
Total working age clients	70,807	73,186	75,349		77,301		82,879
	Other clients receiving an Invalid's Benefit1
Total other clients	1,535	1,610	1,697		1,776		2,318
	Other clients receiving an Invalid's Benefit1
Total	72,342	74,796	77,046		79,077		85,197

Note

1. Numbers of clients recorded in SWIFTT as receiving an Invalid's Benefit at the end of June.

Table 3.24 Trends in the incapacities of working age clients receiving an Invalid's Benefit

Client incapacity at the end of June	Working age clients receiving an Invalid's Benefit1
	2004 Number	2005 Number	2006 Number	2007 Number	2008 Number
Accident, trauma, entry of foreign bodies	4,931	5,048	5,177	5,262	4,932
Disease2	407	442	486	520	635
Cancer	2,006	2,088	2,218	2,212	2,340
Congenital conditions	2,582	2,710	2,882	2,999	3,297
Intellectual disability	10,826	10,914	10,982	11,005	11,028
Psychological or psychiatric conditions	18,879	19,773	20,480	21,354	23,294
Sensory disorders	2,062	2,042	2,043	2,090	2,267
Substance abuse	1,036	1,095	1,162	1,278	1,577
Systemic disorders3	27,911	28,750	29,479	29,990	32,704
Unspecified/ill-defined conditions4	167	324	440	591	805
Total	70,807	73,186	75,349	77,301	82,879

Notes

1. Numbers of working age clients recorded in SWIFTT as receiving an Invalid's Benefit at the end of June.
2. Encompasses circulatory system diseases, infectious diseases and parasitic diseases.
3. Encompasses disorders of physiological systems (eg musculoskeletal systems, metabolic systems).
4. Includes uncoded incapacities and ill-defined conditions.

Table 8.1 shows trends since 1940 in the number of clients receiving an Invalid's Benefit.

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Trends in the proportion of working age people receiving an Invalid's Benefit

Each year since 2004, around 3% of all working age people in the New Zealand population were receiving an Invalid's Benefit at the end of June (see figure 3.8). This relatively constant proportion over a period of population growth reflects the long-term nature of the conditions that result in clients being granted these benefits. Throughout this period, the likelihood of working age people receiving these benefits has increased with age. This reflects the impact of ageing on the incidence of permanent and severe health or disability conditions experienced by people receiving these benefits.

figure 3.8 Trends in the proportion of working age people receiving an Invalid's Benefit, by age

Note

1. Proportion shows:
   1. number of clients in age group recorded in SWIFTT as receiving an Invalid's Benefit at the end of June, divided by
   2. Statistics New Zealand final estimate of the resident population in age group at the end of June.

See table A3.8 for a summary of the SWIFTT data underlying figure 3.8.

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Trends in Invalid's Benefits granted

The number of Invalid's Benefits granted increased in the last year after fluctuating for the previous three years (see table 3.25). This increase reflects in part the impact of operational changes introduced in September 2007, which resulted in increased transfers from sickness-related benefits to Invalid's Benefits. Since 2004/2005, around 70% of the working age clients granted these benefits had transferred from another benefit or district.

Table 3.25 Trends in the length of periods since clients granted an Invalid's Benefit last received any main benefit

Period since client last received any main benefit	2003/2004 Number	2004/2005 Number	2005/2006 Number	2006/2007 Number	2007/2008 Number
	Invalid's Benefits granted to working age clients1
None (clients transferring between benefits or districts)2	8,139	7,665	7,626	7,653	10,491
Under 6 months	657	762	758	813	966
6-12 months	264	278	316	279	401
12-18 months	114	133	125	142	216
18 months-2 years	85	98	74	92	130
2-4 years	239	233	220	225	322
Had not received a main benefit in previous four years	1,546	1,729	1,722	1,870	2,481
Total granted to working age clients	11,044	10,898	10,841	11,074	15,007
	Invalid's Benefits granted to other clients1
Total granted to other clients	789	806	846	884	1,344
	Total Invalid's Benefits granted1
Total	11,833	11,704	11,687	11,958	16,351

Note

1. Numbers of successful Invalid's Benefit applications recorded in SWIFTT during years ended June.
2. Includes only a minority of transfers of benefits between districts. Most such transfers are accomplished without cancelling and re-granting benefits.

Between 2006/2007 and 2007/2008, the proportion of these clients with systemic disorders has increased slightly (from 45% to 49%). Since 2003/2004, between 23% and 27% of these clients have had psychological or psychiatric disorders (see table 3.26).

Table 3.26 Trends in the incapacities of working age clients granted an Invalid's Benefit

Client incapacity when benefit granted	Invalid's Benefits granted to working age clients1
	2003/2004 Number	2004/2005 Number	2005/2006 Number	2006/2007 Number	2007/2008 Number
Accident, trauma, entry of foreign bodies	795	796	802	814	706
Disease	88	95	105	97	159
Cancer	1111	1133	1,105	1,040	1,239
Congenital conditions	238	210	234	226	284
Intellectual disability	354	364	337	363	163
Psychological or psychiatric conditions	2,716	2,613	2,537	2,772	4,076
Sensory disorders	230	191	196	222	306
Substance abuse	214	202	216	239	427
Systemic disorders2	5,221	4,982	5,063	5,001	7,300
Unspecified/ill-defined conditions3	77	312	246	300	347
Total	11,044	10,898	10,841	11,074	15,007

Notes

1. Numbers of successful Invalid's Benefit applications from working age clients recorded in SWIFTT during years ended June.
2. Encompasses circulatory system diseases, infectious diseases, and parasitic diseases.
3. Encompasses disorders of physiological systems (eg musculoskeletal systems, metabolic systems).
4. Includes uncoded incapacities and ill-defined conditions.

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Trends in cancellations of Invalid's Benefits

The number of Invalid's Benefits cancelled each year has increased since 2003/2004 (see table 3.27), reflecting increases in the numbers of people receiving these benefits. Since 2005/2006, the proportion of working age clients cancelling these benefits who entered paid work increased slightly (from 16% to 19%) while the proportion transferring to another benefit, pension or district showed a corresponding decrease (from 32% to 29%). Over this period, around 51% cancelled their benefit for reasons other than transfers or entry to paid work. The chief "Other" reason for cancellations of these benefits is the death of the client.

Table 3.27 Trends in reasons for clients cancelling Invalid's Benefits

Reason for cancellation	2003/2004 Number	2004/2005 Number	2005/2006 Number	2006/2007 Number	2007/2008 Number
	Invalid's Benefits cancelled by working age clients1
Obtained paid work2	1,089	1,328	1,315	1,576	1,650
Transferred to another benefit, pension or district3,4	2,326	2,576	2,613	2,534	2,457
Other2	3,743	4,057	4,154	4,344	4,423
Total cancelled by working age clients	7,158	7,961	8,082	8,454	8,530
	Invalid's Benefits cancelled by other clients1
Total cancelled by other clients	971	1,119	1,156	1,266	1,225
	Total Invalid's Benefits cancelled1
Total	8,129	9,080	9,238	9,720	9,755

Notes

1. Numbers of Invalid's Benefit cancellations by clients recorded in SWIFTT during years ended June.
2. Due to recoding of reasons for cancelling main benefits, these figures may not reconcile with those published in previous years.
3. "Transferred to another benefit [or] pension" includes some transfers from main benefits to New Zealand Superannuation, including those shown previously as "Qualified for New Zealand Superannuation".
4. "Transferred to another … district" represents cancellations undertaken so a client's benefit can be administered from a different Work and Income service centre. These changes may reflect a change of address by the client or an administrative decision by Work and Income. A majority of transfers of benefits between districts are completed without cancelling the client's benefit, and therefore are not included above.

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Trends in expenditure on Invalid's Benefits

Increases since 1995/1996 in annual expenditure on Invalid's Benefits (see table 3.28) reflect at least in part increases in the number of people receiving these benefits.

Table 3.28 Trends in annual expenditure on Invalid's Benefits

Year ended June	Expenditure on Invalid's Benefits1,2,3($m)
1995/1996	501
1996/1997	556
1997/1998	624
1998/1999	661
1999/2000	703
2000/2001	764
2001/2002	846
2002/2003	929
2003/2004	1,010
2004/2005	1,076
2005/2006	1,120
2006/2007	1,179
2007/2008	1,264

Notes

1. Expenditure on Invalid's Benefits in years ended June, including expenditure on supplementary benefits provided to recipients of an Invalid's Benefit.
2. Expenditure shown is net of taxation, adjusted to payment periods based on a standard 30-day month and smoothed using a three-month moving average.
3. Expenditure data in this table differs from, and should not be cited as, MSD's official measure of expenditure on financial assistance provided to clients.

Little seasonal change is evident in monthly expenditure on Invalid's Benefits (see figure 3.9). Temporary reductions in this expenditure in 1995, 2001 and 2005 reflect:

• the transfer of maximised Special Benefit payments to Vote: Health in July 1995
• a fall in expenditure on Accommodation Supplements received by Invalid's Benefit recipients following the reintroduction of income-related rents in November 2000 (this was offset later by continued growth in expenditure on the Invalid's Benefit, excluding supplementary benefits)
• adjustment of maxima for Accommodation Supplements in 2005.

The temporary spike in expenditure in mid-2007 is an administrative result of transferring Invalid's Benefits from fortnightly to weekly payments, and doesn't represent money paid to clients.

figure 3.9 Trends in monthly expenditure on Invalid's Benefits

Notes

1. Monthly expenditure on Invalid's Benefits, including expenditure on supplementary benefits paid to recipients of an Invalid's Benefit.
2. Expenditure shown is net of taxation, adjusted to payment periods based on a standard 30-day month and smoothed using a three-month moving average.
3. Expenditure data in this graph differs from, and should not be cited as, MSD's official measure of expenditure on financial assistance provided to clients.

Table 8.2 shows trends since 1940 in expenditure on Invalid's Benefits, including expenditure on supplementary benefits paid to people receiving an Invalid's Benefit¹.

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¹From 1996, expenditure data shown in table 8.2 reflects deductions for debts established and for clients receiving overseas pensions as well as these benefits. The data in figure 3.9 and table 3.28 doesn't reflect these deductions.