Full funding?

[MSTRS]

We've all heard the term 'fully funded model'. But who of us actually understand what it means?
I know I don't (think so).
What I do know is that Nick the Prick wants this in place by 2019. But what will that mean for us?
Premiums (levies) will never increase again? Will go down? Will cease altogether?
Will the reserve be so huge that it is self-sustaining? Or simply able to 'subsidise' our contributions?
Can anyone lay it out for the bewildered amongst us?
If this has been answered somewhere else, then apologies. I've not seen it.

[Mom]

I believe that the definition of fully funded in this case is that there will be sufficient funds in hand to cover the costs of future payments for injuries that happen today.

[Ocean1]

It's an insurance term, and therefore a) a good indication as to what class of entity the government see ACC as, and b) not to be trusted.

It means, currently: a) that the future cost of current claims is born by current contributors, and b) whatever they say it means on any given day.

Finally, it's unnescessary in terms of cashflow, (they've got current costs well covered), and there's no way in hell the premiums will be going down again once current contributions have cought up with the (theoretical) ongoing financial risk.

[NONONO]

As far as I'm aware it simply means (put simply) that at any given time there are sufficient funds in the coffers to fund all existing claims (projected into the future).
It's a nonsense and only makes sense in the very twisted world of accountancy.
However, it does mean that the way the scheme is reported to be doing is open to interpretation based on current ideology.
So, if A = current funds and B = projected payouts, you will always have a confounding variable of C (where C = current ideology).
Ha! Bollocks!!

[MSTRS]

So fully funded is a (political) crock. Just another way for the bastards to rape and pillage our wallets.
And of course, being that our beloved pollies are always to be trusted with the cookie jar, the huge reserves is also open to raping and pillaging when/if it suits them.
Fully fucked would be a more accurate way of describing this travesty.

[bogan]

way I see it they need it fully funded to privatize it, otherwise the private companies will be left with the bills for those currently injured. And then one of the reasons they'll use to sway us to privatization will be the much lower levies/rates, of course they'll leave out the fact that now the scheme is fully funded the levie's could be dropped anyway. Which you might say well thats fine, private companies will introduce competition and make our rates cheaper, they will also deny cover every chance they get to increase profits, not give cover to people with existing conditions etc.

Also, if we can afford to pay people to have kids, why can't we also afford to keep em healthy when accident occur, seems a no brainer which one to stop first.

[NinjaNanna]

As I understand it...

Previously our fees paid in any given year covered only that years costs.

Sometime ago they decided this was unfair on future tax payers as they were paying accidents that occured in the past.

Now our fees cover the lifetime cost of any given accident so theoretically future levy payers aren't picking up the bill for todays mistakes.

Obvioulsy when this change was made there was a shortfall as the past accidents haven't had their lifetime cost accounted for.

Full Funding meant that extra fees have to be collected to cover these shortfalls.

As far as I know ACC has been cunning and haven't actually set a specific levy for paying for the "full funding shortfall" if they'd done that then we'd know exactly how much our fees should drop come 2019.

But theoretically they should as we won't be raising funds to cover the shortfalls of the past and only need to collect enough money to cover that years lifetime accident costs.

Odds are they'll never give us the money back - they'll simply say that they won't raise ACC that year and low and behold look the numbers the same.

[Winston001]

By any definition ACC is a public no-fault insurance scheme. Insurance companies (and banks) establish a "float" (Tier 1 capital for a bank) which is calculated on an actuarial basis to cover future obligations. Common sense not accounting magic.

Imagine you are looking at retirement in 20 years. You decide that an annual Gold Coast holiday in retirement is what you'll need and it will cost $5000 each visit. You estimate you'll only do it for 10 years so that means $50,000 is required in kitty. You have two choices - either start taxing yourself to save up that amount, or take a punt that you'll have $5000pa extra income at retirement.

So it is completely logical that ACC sets up a longterm investment fund rather than betting future levies will pay the way.

As a nation we should have done this decades ago with our retirement pensions. Instead it's been pay-as-you-go which means our kids are facing a wall of tax to look after the babyboom generation. That's why Cullen established the NZ Superfund. And why Kiwisaver exists. Its not much compared to Australia but better than nothing.

[Ocean1]

So it is completely logical that ACC sets up a longterm investment fund rather than betting future levies will pay the way.

As a nation we should have done this decades ago with our retirement pensions. Instead it's been pay-as-you-go which means our kids are facing a wall of tax to look after the babyboom generation. That's why Cullen established the NZ Superfund. And why Kiwisaver exists. Its not much compared to Australia but better than nothing.

Pension fund yes. As you say, bloody criminal not to have set up fully funded super scheme to replace the subsidised one we used to have.

ACC? Not logical, annual costs are consistent, all that's needed is a consistent policy set wrt claims and the system's stable and perfectly viable. And like I said, how likely is it that our premiums will return to last years rates in 2019?

[NONONO]

So fully funded is a (political) crock. Just another way for the bastards to rape and pillage our wallets.
And of course, being that our beloved pollies are always to be trusted with the cookie jar, the huge reserves is also open to raping and pillaging when/if it suits them.
Fully fucked would be a more accurate way of describing this travesty.

Thought you said you did'nt understand it? Spot on that man.

[NONONO]

By any definition ACC is a public no-fault insurance scheme. Insurance companies (and banks) establish a "float" (Tier 1 capital for a bank) which is calculated on an actuarial basis to cover future obligations. Common sense not accounting magic.

Imagine you are looking at retirement in 20 years. You decide that an annual Gold Coast holiday in retirement is what you'll need and it will cost $5000 each visit. You estimate you'll only do it for 10 years so that means $50,000 is required in kitty. You have two choices - either start taxing yourself to save up that amount, or take a punt that you'll have $5000pa extra income at retirement.

So it is completely logical that ACC sets up a longterm investment fund rather than betting future levies will pay the way.

As a nation we should have done this decades ago with our retirement pensions. Instead it's been pay-as-you-go which means our kids are facing a wall of tax to look after the babyboom generation. That's why Cullen established the NZ Superfund. And why Kiwisaver exists. Its not much compared to Australia but better than nothing.

"By any definition" surely not.
ACC is not now, nor has it ever been an insurance sheme/scam. Why are the apologists for the NATS and Judge so bloody determined to push this line in the face of the evidence?
Lets not go over all this shit again. Factualy, morally and logically the ACC Futures Coalition won this argument last year. Idealogicaly the Nats can not accept this as it would mean no sell off.

[riffer]

"By any definition" surely not.
ACC is not now, nor has it ever been an insurance sheme/scam. Why are the apologists for the NATS and Judge so bloody determined to push this line in the face of the evidence?

Because they want to create an insurance company.


Lets not go over all this shit again. Factualy, morally and logically the ACC Futures Coalition won this argument last year. Idealogicaly the Nats can not accept this as it would mean no sell off.

Don't you believe it. They've only said no selling the company wholesale in this term. Doesn't at all prevent them selling off parts of the business piece by piece until it's all gone.

[riffer]

Pension fund yes. As you say, bloody criminal not to have set up fully funded super scheme to replace the subsidised one we used to have.

ACC? Not logical, annual costs are consistent, all that's needed is a consistent policy set wrt claims and the system's stable and perfectly viable. And like I said, how likely is it that our premiums will return to last years rates in 2019?

About as likely as those emails that claim to increase the length of my dick by 4 inches in a month are true.

[Ocean1]

About as likely as those emails that claim to increase the length of my dick by 4 inches in a month are true.

Which is why I feel no obligation to play the game by the rules.

When the rules are obviously no form of socially constructive agreement but instructions for some fucking herd animal to be harvseted for maximum return then I'll make up my own rules to match my own agenda.

I can do this with a clear concience because my contribution over the last few decades has been at least two orders of magnitude greater than either my current costs to the system or my likely liability over the next couple.

[NONONO]

Which is why I feel no obligation to play the game by the rules.

When the rules are obviously no form of socially constructive agreement but instructions for some fucking herd animal to be harvseted for maximum return then I'll make up my own rules to match my own agenda.

I can do this with a clear concience because my contribution over the last few decades has been at least two orders of magnitude greater than either my current costs to the system or my likely liability over the next couple.

In all seriousness I love this last post.
Personally I think this has the potential to be a new starting point in the campaign.

[Winston001]

"By any definition" surely not.
ACC is not now, nor has it ever been an insurance sheme/scam. Why are the apologists for the NATS and Judge so bloody determined to push this line in the face of the evidence?


Ok, what evidence? FYI the 1992 version of the law was: The Accident Rehabilitation and Compensation Insurance Act 1992

That was superceded by the Accident Compensation Act 2001.



Trying to redefine ACC as say, a social contract, doesn't change the core reality that its insurance. A spade is a spade.

[MSTRS]

Compensation. Not insurance. There is a difference. Albeit subtle.
Insurance suggests policies tailored to the individual, based on their personal risk assessment. We don't have that, do we?

[Winston001]

Compensation. Not insurance. There is a difference. Albeit subtle.
Insurance suggests policies tailored to the individual, based on their personal risk assessment. We don't have that, do we?

Well yes we do. Forestry workers are charged the highest rate of cover, office staff the lowest.

[porky]

Dont want to bore you with bullshit, but the scheme was fully funded from 1972 to 82. 82 saw the govt have a change of heart, (Quigley and co) and went for a pay as you go scheme, reducing levies. just about screwed ACC as they just about spent every last penny and in 87 were forced to hike the levies. Whats changed since the woodhouse report is the number of leaches hanging on, for longer, for more $$$$$ and for more "dodgy" type conditions getting paid out=> fully funded

[Winston001]

Dont want to bore you with bullshit, but the scheme was fully funded from 1972 to 82. 82 saw the govt have a change of heart, (Quigley and co) and went for a pay as you go scheme, reducing levies. just about screwed ACC as they just about spent every last penny and in 87 were forced to hike the levies. Whats changed since the woodhouse report is the number of leaches hanging on, for longer, for more $$$$$ and for more "dodgy" type conditions getting paid out=> fully funded

Agreed. In fact I meant to say in response to Ocean's doubt that ACC levies would fall in the future, that this did in fact happen in the 1990s. It was quite a surprise to see an annual bill fall which is why I remember it.

Sir Owen Woodhouse recommended that Workers Compensation be replaced by a no-fault universal compensation scheme on a social welfare basis. Essentially the same as the dole, old age pensions etc. However by 1972 the Department of Social Welfare and Parliament come to the view that the (revolutionary new) scheme needed to be separate and fully funded. And thats how the Accident Compensation Act 1972 proceeded.

We've turned full circle and gone back to the original idea.

ACC still stands head and shoulders above any other social accident protection system in the world. I do not believe that any private insurance company could compete with it. I've mentioned before that our business took up with a private insurer in 1999 when ACC was sidelined - and that insurer went into liquidation in 2003. I wonder what happened to the people on claim.......

[MSTRS]

Well yes we do. Forestry workers are charged the highest rate of cover, office staff the lowest.

That is still a collective risk. Through good luck or good management, some people avoid work-based injury right through their working careers, whilst others...well...
So Mr Safe and Sensible's employer gets to pay the same premium for all his employees.
That's where ACC differs from Insurance. The collective risk is borne by all, for the benefit of all.
The other difference is in the reason for the very existence of either entity. Acc exists for the benefit of it's 'members'. Insurance exists for the benefit of it's shareholders.

[BoristheBiter]

Which is why I feel no obligation to play the game by the rules.

When the rules are obviously no form of socially constructive agreement but instructions for some fucking herd animal to be harvseted for maximum return then I'll make up my own rules to match my own agenda.

I can do this with a clear concience because my contribution over the last few decades has been at least two orders of magnitude greater than either my current costs to the system or my likely liability over the next couple.

So what you are saying is that you want it to be based on each individual case as in your case you seem not to be high risk.
I like that idea, stop all ACC levies from everything and charge every person a fixed amount based on their risk.
Then you have have the option not to pay anything if you think it is a "crock of shite" but you have no cover as you have not paid your levies.

OH hang on doesn't this sound like the USA system??

[Winston001]

That is still a collective risk. Through good luck or good management, some people avoid work-based injury right through their working careers, whilst others...well...
So Mr Safe and Sensible's employer gets to pay the same premium for all his employees.
That's where ACC differs from Insurance. The collective risk is borne by all, for the benefit of all.

Mmmm....so why not have just a single levy on each individual across the nation taken as tax? Just as we do for the dole, DPB, national super etc? Leave employers and job risk out of it if accident compensation is truely a national collective risk. Sir Owen Woodhouse thought it was workable. You'd have to accept paying a lot more ACC though.



The other difference is in the reason for the very existence of either entity. Acc exists for the benefit of it's 'members'. Insurance exists for the benefit of it's shareholders.

Southern Cross is owned by members. As is Medical Assurance. AMI certainly used to be. Civic-assurance also.

[MSTRS]

Mmmm....so why not have just a single levy on each individual across the nation taken as tax? Just as we do for the dole, DPB, national super etc? Leave employers and job risk out of it if accident compensation is truely a national collective risk. Sir Owen Woodhouse thought it was workable. You'd have to accept paying a lot more ACC though.



And that is exactly what we got in 1974...

[BoristheBiter]

And that is exactly what we got in 1974...

I can see it all falling into shape.
pitty its a circle.

[MSTRS]

I can see it all falling into shape.
pitty its a circle.

Ya what? There's no way that Nick the Prick or ACC is going in that direction.
It was a Labour/Socialist system that successive National govts have tried to undermine and/or get rid of since it's inception.
Now all parties see it as a cashcow, so there's no way they are going to reinstate it's original principles and means of funding.
No way, unless forced to. Got any ideas?

[BoristheBiter]

Ya what? There's no way that Nick the Prick or ACC is going in that direction.
It was a Labour/Socialist system that successive National govts have tried to undermine and/or get rid of since it's inception.
Now all parties see it as a cashcow, so there's no way they are going to reinstate it's original principles and means of funding.
No way, unless forced to. Got any ideas?

other than the use of my shotgun.... no.
What makes you think lab/soc would do any better, they didn't for the last 9 years they were in.
Just like the consoladated fund, its just money for bribes come election time.

we (nz) are in the same place the uk was (around 70/80) and are heading in the same direction. election bribes from both sides have become unsustanable but neither will remove them because it would be political sucide to do so.
our biggest mistake was mmp, not the fpp was any better, but it started there and it has been going down eversince.

[avgas]

So fully funded is a (political) crock.
Yes and No - fully funded means that. Funds covers costs. Fully funded means that in theory it could cover "all" costs - for the case of insurance this adds a fictitious figure according to claims that "could" happen. Unfortunately it seems that they have taken the concept that a "large proportion" will claim.

True term to use in this instance to measure the performance would be liquidity, using existing claims. Multiplied by a factor of systematic risk......
But that would not make a good press document......

[Ocean1]

So what you are saying is that you want it to be based on each individual case as in your case you seem not to be high risk.
I like that idea, stop all ACC levies from everything and charge every person a fixed amount based on their risk.
Then you have have the option not to pay anything if you think it is a "crock of shite" but you have no cover as you have not paid your levies.

OH hang on doesn't this sound like the USA system??

Wasn't my idea to charge a subset of "clients" more based on their risk profile. But if that’s the rules then I’ll use actual stat's if it’s all the same to you, not some obvious construct pulled out of thin air to support a policy change which has only one possible function: to increase revenue from those best able to pay it.

You can’t have your cake and eat it too, either charge me for the services I use individually or collectively. In the first case I’ve already paid enough to cover the cost of any likely incident. Enough, in fact to pay for a great deal of carnage, an unattractively large number of very serious and likely very painful incidents. I’m OK with continuing to pay merely ten times what the service is worth.

In the second case we’re obviously talking about everyone paying enough to cover each other’s arses, and I’m more than happy to carry my share of the cost. Again, I’m even OK with paying a bit more to make up for the lazy pricks that don’t bother contributing.

What I’m not happy to do is to pay a shitload more based on the say-so of a bunch of grasping pricks who can’t be bothered to lie even slightly convincingly about their motives. It’s extortion, pure and simple, a classic protection racket.

All of which has fuck all to do with "the USA system". They don’t have one.

[Winston001]

And that is exactly what we got in 1974...

No. You are mistaken. The original ACC scheme was entirely funded by employers and motorists. Different levies applied to different work, and to different types of vehicles - trailer, car, truck etc. Have a look at Section 72 of the original ACC Act 1972 http://www.acc.co.nz/about-acc/legal/legislation/the-accident-compensation-act-1972-repealed/SS_WCM_050074 and more specifically the Statutory Regulations 1973/290.



It was a Labour/Socialist system that successive National govts have tried to undermine and/or get rid of since it's inception.
Now all parties see it as a cashcow, so there's no way they are going to reinstate it's original principles and means of funding.


I respect your views and admire your passion. There is a lot of misinformation about ACC and I'm certainly no expert either but not everything you read is true.

Neither National nor Labour have tried to comprehensively get rid of ACC. The original Woodhouse Report was prepared under National - and passed into law by Labour. Since then the Act has been reformed 3 times and the reason was public dissatisfaction with the scheme. Some of the changes such as in 1992 made ACC very complex. For a very brief 2 years private insurance companies were allowed to compete but ACC itself carried on. No sale, no money grab.

[BoristheBiter]

Wasn't my idea to charge a subset of "clients" more based on their risk profile. But if that’s the rules then I’ll use actual stat's if it’s all the same to you, not some obvious construct pulled out of thin air to support a policy change which has only one possible function: to increase revenue from those best able to pay it.
Its the way it has allways been, nothing has changed on this.

You can’t have your cake and eat it too, either charge me for the services I use individually or collectively. In the first case I’ve already paid enough to cover the cost of any likely incident. Enough, in fact to pay for a great deal of carnage, an unattractively large number of very serious and likely very painful incidents. I’m OK with continuing to pay merely ten times what the service is worth.
So again, would you rather have a system based on each case?

In the second case we’re obviously talking about everyone paying enough to cover each other’s arses, and I’m more than happy to carry my share of the cost. Again, I’m even OK with paying a bit more to make up for the lazy pricks that don’t bother contributing.
Well i am, its user pays now and while i know some people need a hand from time to time i refuse to pay for some one that wont get off there arse to help themselves as they know the tasb will be paid for by somone else.

What I’m not happy to do is to pay a shitload more based on the say-so of a bunch of grasping pricks who can’t be bothered to lie even slightly convincingly about their motives. It’s extortion, pure and simple, a classic protection racket.
Agreed

All of which has fuck all to do with "the USA system". They don’t have one.
I was drawing a very long bow

[MSTRS]

No. You are mistaken.
So it seems...my bad.

Neither National nor Labour have tried to comprehensively get rid of ACC. The original Woodhouse Report was prepared under National - and passed into law by Labour.
I realise that Keith Holyoake's govt may have initiated the report, but in 1972 Norm Kirk and Labour were in govt so would have put their own spin on the report and not simply ratified it. What we can't know is what a National govt would have passed into law, compared with what the Labour govt did. Schemes of this nature are Socialist in nature, in that the individual cannot make their own choice and the state controls the lot. So I stand by my earlier assertion...

Since then the Act has been reformed 3 times and the reason was public dissatisfaction with the scheme. Some of the changes such as in 1992 made ACC very complex. For a very brief 2 years private insurance companies were allowed to compete but ACC itself carried on. No sale, no money grab.
1992 saw a National govt doing the tinkering. It was also under a National govt later in the 90s that saw some privatising happen. Labour quickly revoked that right. I 'recall' the reason given that ACC was losing money. So I also stand by my assertion that National govts have tinkered with ACC the most and that tinkering has not necessarily been in the interests of ACC continuing in whatever form was first envisaged.


I sometimes think that the more simplistic view is the more accurate...

[Winston001]

I sometimes think that the more simplistic view is the more accurate...

LOL good point. The thing is though, ACC, health care, taxation, and social welfare (just examples) are all incredibly complex because they have to treat 4 million people fairly. There just aren't many simple answers. In many ways the US approach of leaving everything to private insurance is the easiest but it is also harsh and I'm not impressed by it.

So to understand issues we all have to do a bit of research rather than believing anything a politican or activist says. The various ACC arguments on KB are excellent examples of analysis of faulty ACC data. The people like Ixion who put it up don't manage that with only 5 minutes on Stuff. It takes hours, days, and weeks for them to dig out the errors.

Anyway if anyone is interested here is an article on the early ACC from Victoria Law Review 2002. http://docs.google.com/viewer?a=v&q=cache:j2p1gz6e7hAJ:www.victoria.ac.nz/law/documentation/VUWLR%2520PDFS/34%282%29/07%2520Martin.pdf+accident+compensation+act%3F&hl=en&gl=nz&pid=bl&srcid=ADGEESh3lSJIeA9Ouqmu5pDwl92ym5GlTSRSiwZYqp4L Fi8T6DvvlPHkbmqoGqU_-IWLRzR3rtmUa43h5hlYPPHdMO8fYXc0IN8_onhIe8Z5jCWjODK 6ZL5mtKjkmLxM3n04ACgEPLNd&sig=AHIEtbTGDWGKh1K2ymolsWa6VSXJIql_Pg

[Pixie]

Full funding is used in the insurance industry so that the existing claimants are covered if the company fails.
It also means that a company can be sold debt free.