How the numbers work: benefits, ACC and student support

Student Loan Basics

1. Live in NZ (or overseas <183 days/year)
2. Contact IRD before leaving NZ
3. Keep loan details up to date
4. If conditions met: 0% interest
5. If conditions broken: Interest charged from date you left

How Automatic Repayments Work

1. Example: Weekly wage $800
2. Threshold: $464/week
3. Income over threshold: $800 - $464 = $336
4. Repayment: $336 × 12% = $40.32
5. Take-home (after PAYE + loan): Approximately $580

How Automatic Repayments Work

1. Annual threshold: $24,128
2. Income over threshold: $55,000 - $24,128 = $30,872
3. Annual repayment: $30,872 × 12%

Annual repayment: $3,705

Self-Employed Repayments

1. Calculate income over $24,128
2. Pay 12% as student loan repayment
3. Included in provisional tax payments
4. Three payments per year (Aug, Jan, May)

Self-Employed Repayments

1. Self-employed income: $70,000
2. Over threshold: $70,000 - $24,128 = $45,872
3. Annual repayment: $45,872 × 12% = $5,505
4. Three payments: $1,835 each (Aug, Jan, May)

Voluntary Repayments

1. Online: myIR account, immediate effect
2. Automatic payment: Set up from bank
3. Lump sum: Any amount, any time
4. Tax refund: Direct refund to loan

Example 1: Graduate Entry Salary

1. Annual income: $50,000
2. Threshold: $24,128
3. Over threshold: $50,000 - $24,128 = $25,872
4. Repayment: $25,872 × 12%

Annual repayment: $3,105

Example 1: Graduate Entry Salary

1. Gross fortnightly: $1,923
2. Threshold fortnightly: $928
3. Over threshold: $995
4. Loan repayment: $995 × 12% = $119
5. PAYE tax: ~$310
6. Take-home: ~$1,494

Example 2: Mid-Career Professional

1. Annual income: $80,000
2. Over threshold: $80,000 - $24,128 = $55,872
3. Annual repayment: $55,872 × 12%
4. Monthly repayment: ~$559

Annual repayment: $6,705

Example 2: Mid-Career Professional

1. Starting balance: $40,000
2. Annual repayment: $6,705
3. Years to pay off: 40,000 ÷ 6,705 = 6 years
4. Total paid: $40,000 (no interest if stay in NZ)

Example 3: Part-Time Work While Studying

1. Annual income: $15,000
2. Threshold: $24,128
3. Below threshold: No repayments required

Annual repayment: $0

Example 4: Multiple Income Sources

1. $45,000 - $24,128 = $20,872
2. PAYE deduction: $20,872 × 12% = $2,505

Example 4: Multiple Income Sources

1. Total income: $45,000 + $20,000 = $65,000
2. Over threshold: $65,000 - $24,128 = $40,872
3. Total repayment due: $40,872 × 12% = $4,905
4. Already paid via PAYE: $2,505

Additional owed: $2,400

Example 5: Voluntary Extra Repayments

1. Loan: $35,000
2. Salary: $70,000
3. Annual repayment: $5,505
4. Years to pay: 35,000 ÷ 5,505 = 6.4 years

Example 5: Voluntary Extra Repayments

1. Compulsory: $5,505/year
2. Voluntary: $2,400/year
3. Total: $7,905/year
4. Years to pay: 35,000 ÷ 7,905 = 4.4 years

Saves: 2 years of repayments!

Example 6: Going Overseas

1. Loan: $45,000 (interest-free)
2. Salary: $65,000
3. Repayment: $4,905/year

Example 6: Going Overseas

1. Loan: $45,000
2. Interest: 3.1% = $1,395/year
3. Minimum repayment: $3,744/year
4. Total cost: $5,139/year
5. Extra cost vs NZ: $234/year due to interest

Example 6: Going Overseas

1. Earning AUD $95,000 in Australia
2. Pay AUD $1,000/month (NZD ~$1,100)
3. Annual repayment: NZD $13,200
4. Pay off in: 3.5 years vs 9+ years at minimum
5. Interest saved: ~$7,500

🌍 Real-World Loan Scenarios

1. Salary: $55,000
2. Annual repayment: $3,705
3. Time to clear: 10.3 years
4. Total repaid: $38,000
5. Interest paid: $0

Who this happens to, and what it meant for them

🌍 Real-World Loan Scenarios

1. UK salary: GBP £35,000 (NZD ~$73,000)
2. Minimum repayment: $3,744/year
3. Interest at 3.1%: $1,178/year
4. After 2 years: Balance $33,800 (grew by $4,200)

🌍 Real-World Loan Scenarios

1. Pay GBP £500/month (NZD ~$1,050)
2. Annual repayment: $12,600
3. After 2 years: Balance $14,500
4. Return to NZ, pay off in 3 more years

Total time: 5 years vs 10 years!

1. Salary: $60,000
2. Tax code: M (should be ME)
3. Student loan deductions: $0
4. Take-home seemed higher than expected

Who this happens to, and what it meant for them

1. Income over threshold: $35,872
2. Should have paid: $35,872 × 12% = $4,305
3. Actually paid: $0

Bill from IRD: $4,305 due in March!

1. 7 years study: Fees + living costs
2. Total loan: $120,000

Who this happens to, and what it meant for them

1. Salary: $70,000
2. Annual repayment: $5,505
3. Balance after 2 years: $109,000

1. Salary: $95,000
2. Annual repayment: $8,505
3. Balance after 4 more years: $75,000

1. Salary: $180,000
2. Annual repayment: $18,705
3. Plus voluntary $6,000/year
4. Total: $24,705/year
5. Cleared in 3 years

The Basic Formula

1. DPB = Year Before Recovery + (Remaining Amount / Cash Flow in Recovery Year)

Simple Example

1. Year 1: $3,000 / (1.10)^1 = $2,727
2. Year 2: $3,000 / (1.10)^2 = $2,479
3. Year 3: $3,000 / (1.10)^3 = $2,254
4. Year 4: $3,000 / (1.10)^4 = $2,049

Simple Example

1. Year 0: -$10,000 (initial investment)
2. Year 1: -$10,000 + $2,727 = -$7,273
3. Year 2: -$7,273 + $2,479 = -$4,794
4. Year 3: -$4,794 + $2,254 = -$2,540
5. Year 4: -$2,540 + $2,049 = -$491
6. Year 5: -$491 + $1,863 = +$1,372 (positive!)

Simple Example

1. Recovery occurs in Year 5
2. DPB = 4 + ($491 / $1,863)
3. DPB = 4 + 0.26

DPB = 4.26 years

Example 1: Equipment Purchase

1. Initial cost: $150,000
2. Annual cash flows: Year 1: $30,000, Year 2: $35,000, Year 3: $45,000, Year 4: $60,000, Year 5: $85,000
3. Discount rate: 10%

Example 1: Equipment Purchase

1. Recovery occurs between Year 4 and Year 5
2. Amount still to recover at end of Year 4: $19,045
3. Cash flow in Year 5: $52,785
4. DPB = 4 + ($19,045 / $52,785)
5. DPB = 4 + 0.36

DPB = 4.36 years

Example 1: Equipment Purchase

1. Initial cost: $250,000
2. Annual cash flows: Year 1: $55,000, Year 2: $65,000, Year 3: $77,000, Year 4: $99,000, Year 5: $105,000
3. Discount rate: 10%

1. DPB = 4 + ($20,871 / $65,205)
2. DPB = 4 + 0.32

DPB = 4.32 years

Understanding Discount Factors

1. Discount Factor = 1 / (1 + discount rate)^year

🌍 Real-World DPB Applications

1. Initial cost (panels + installation): $80,000
2. Annual electricity savings: $18,000
3. Government rebate (Year 1): $5,000
4. Discount rate: 8%
5. Expected panel life: 25 years

Who this happens to, and what it meant for them

🌍 Real-World DPB Applications

1. DPB = 5 + ($3,496 / $11,340)
2. DPB = 5 + 0.31

DPB = 5.31 years

1. Development cost: $500,000
2. Year 1 revenue: $120,000
3. Year 2 revenue: $180,000
4. Year 3 revenue: $250,000
5. Year 4+ revenue: $300,000
6. Discount rate: 15% (high-tech risk)

Who this happens to, and what it meant for them

1. Product A DPB = 3 + ($95,151 / $171,530)

Product A DPB = 3.55 years

1. Development cost: $200,000
2. Year 1 revenue: $80,000
3. Year 2 revenue: $120,000
4. Year 3+ revenue: $140,000
5. Discount rate: 15%

1. Product B DPB = 2 + ($39,684 / $92,010)

Product B DPB = 2.43 years

1. Total equipment cost: $400,000 ($40,000 per location)
2. Labour savings per year: $95,000 (more efficient equipment)
3. Energy savings per year: $25,000
4. Increased capacity revenue: $30,000/year
5. Total annual benefit: $150,000
6. Discount rate: 12%

Who this happens to, and what it meant for them

1. DPB = 3 + ($39,700 / $95,400)
2. DPB = 3 + 0.42

DPB = 3.42 years

1. Upfront cost: $300,000
2. Expected new customers: 500 in Year 1, 200/year after
3. Revenue per customer: $400/year
4. Discount rate: 20% (startup risk)
5. Company's cash runway: 3 years

Who this happens to, and what it meant for them

1. DPB = 3 + ($31,481 / $38,580)

DPB = 3.82 years

Regular Contributions Example

1. Weekly contribution: $200
2. Annual contribution: $10,400
3. Total contributed: $364,000
4. At 5% return: $1,032,000
5. Investment growth: $668,000

Typical Salary-Based Contributions

1. Employee contribution: $70,000 × 3.5% = $2,450/year
2. Employer contribution: $70,000 × 3.5% = $2,450/year (minus ESCT)
3. Government contribution: $260.72/year (max)
4. Total annual: ~$5,161

Typical Salary-Based Contributions

1. Total contributed: $141,000
2. Final value: $327,000
3. Investment growth: $186,000

Example 1: Graduate Starting KiwiSaver

1. Employee: $50,000 × 3.5% = $1,750/year
2. Employer: $50,000 × 3.5% = $1,750/year
3. Government: $260.72/year
4. Total: $3,760.72/year

Example 1: Graduate Starting KiwiSaver

1. Total contributed: $147,882
2. Final balance: $477,000
3. Investment growth: $329,118

Example 2: Mid-Career Boost

1. Employee: $80,000 × 6% = $4,800/year
2. Employer: $80,000 × 3.5% = $2,800/year
3. Government: $260.72/year
4. Total: $7,860.72/year

Example 2: Mid-Career Boost

1. Total contributed: $193,025
2. Final balance: $368,000
3. Investment growth: $174,975

Example 3: Aggressive Saver

1. Employee: $90,000 × 10% = $9,000/year
2. Employer: $90,000 × 3% = $2,700/year
3. Government: $260.72/year
4. Total: $12,221/year

Example 3: Aggressive Saver

1. Total contributed: $427,735
2. Final balance: $1,382,000
3. Investment growth: $954,265

Example 4: Late Starter Catch-Up

1. Employee: $75,000 × 8% = $6,000/year
2. Employer: $75,000 × 3% = $2,250/year
3. Government: $260.72/year
4. Total: $8,771/year

Example 4: Late Starter Catch-Up

1. Total contributed: $175,420
2. Final balance: $291,000
3. Investment growth: $115,580

🌍 Real-World Retirement Planning

1. Salary: $85,000, 6% contribution
2. Annual: $6,821
3. 35 years to 65 at 5%: $775,000

Who this happens to, and what it meant for them

🌍 Real-World Retirement Planning

1. Salary: $55,000, 4% contribution
2. Annual: $4,221
3. 30 years active (5 year break) at 5%: $293,000

🌍 Real-World Retirement Planning

1. Total super: $1,068,000
2. Annual income (4%): $42,720
3. Plus NZ Super (couple): $28,000

Total retirement income: $70,720/year

🌍 Real-World Retirement Planning

1. Age: 28, Salary: $95,000
2. KiwiSaver: 10% ($12,721/year)
3. Additional index funds: $25,000/year
4. Total savings: $37,721/year

Who this happens to, and what it meant for them

🌍 Real-World Retirement Planning

1. KiwiSaver (locked): $475,000
2. Accessible investments: $1,180,000
3. Total: $1,655,000

🌍 Real-World Retirement Planning

1. Age 50-65: Live on accessible $1.18M
2. 4% rule: $47,200/year for 15 years
3. Age 65: Access KiwiSaver $475K + NZ Super

🌍 Real-World Retirement Planning

1. 30 years of contributions
2. Balance at 65: $331,000

Who this happens to, and what it meant for them

1. 28 years of contributions
2. Balance at 65: $296,000

Cost of break: $35,000!

Abatement when you return to work

1. Usual pre-injury pay: $1,000 a week
2. Full weekly compensation at 80%: $800
3. You return part-time and earn: $300 a week
4. Abated compensation so total does not exceed usual pay: $1,000 - $300 = $700

You receive $300 wages + $700 ACC = $1,000, not more than your usual pay

🔢 Real-World Examples

1. Usual weekly pay: $70,000 ÷ 52 = $1,346.15
2. Week 1 (work injury), paid by his employer at 80%: $1,346.15 × 80% = $1,076.92
3. From day 8, ACC pays 80%: $1,346.15 × 80% = $1,076.92 a week

$1,076.92 gross a week, above the $766.40 minimum and below the $2,466.20 maximum

Who this happens to, and what it meant for them

🔢 Real-World Examples

1. Usual weekly pay: $52,000 ÷ 52 = $1,000.00
2. Week 1: no employer payment, so she uses annual leave
3. From day 8, ACC pays 80%: $1,000.00 × 80% = $800.00 a week

$800.00 gross a week from ACC, above the $766.40 minimum

Who this happens to, and what it meant for them

🔢 Real-World Examples

1. Usual weekly pay: $220,000 ÷ 52 = $4,230.77
2. 80% would be: $4,230.77 × 80% = $3,384.62 a week
3. But the maximum from 1 July 2026 is $2,466.20 a week
4. Capped payment: $2,466.20 a week = $128,242.40 a year

Effective replacement: $128,242.40 ÷ $220,000 = about 58% of his income, not 80%

Who this happens to, and what it meant for them

1. Agreed CoverPlus Extra amount: $80,000
2. CoverPlus Extra pays 100% of the agreed amount: $80,000 ÷ 52 = $1,538.46 a week
3. Compare standard CoverPlus:
4. If her last tax return showed $60,000, standard CoverPlus pays 80%
5. $60,000 × 80% = $48,000 ÷ 52 = $923.08 a week

CoverPlus Extra: $1,538.46 a week vs standard CoverPlus: $923.08 a week

Who this happens to, and what it meant for them

How much Temporary Additional Support can be

1. Net main benefit rate: $400.00 a week, used here as an illustration
2. Maximum Temporary Additional Support: $400.00 x 30% = $120.00 a week

Up to $120.00 a week, and none of it repayable.

Why the advance arithmetic goes wrong

1. Total advanced: $900.00
2. Weekly repayment: $20.00
3. Weeks of repayment: $900.00 / $20.00 = 45 weeks
4. Income reduction: $20.00 / $400.00 = 5% less each week, for those 45 weeks

Nearly eleven months on 5 percent less, which is itself a reason to need help.

Why the advance arithmetic goes wrong

1. Weekly amount: $60.00
2. Over 13 weeks: $60.00 x 13 = $780.00
3. Repayable: $0.00

$780.00 you keep, against $900.00 you repay over 45 weeks.

Two rules that are worth money

1. Make contact first , by phone or through MyMSD, before gathering anything.
2. Then complete the application within 20 working days of that contact.
3. Assistance can run from the contact date rather than from the day you finished.

Delaying the first call is the expensive part, not delaying the paperwork.

The 12% Repayment Rule

1. Example: Salary of $55,000/year
2. Repayment threshold: $24,128
3. Amount over threshold: $30,872
4. 12% of $30,872 = $3,704.64/year
5. Per fortnight: approximately $142.49

How Long Does Repayment Take?

1. Typical 3-year degree loan: ~$57,000
2. Starting salary: $55,000
3. Annual repayment at 12%: $3,705
4. Years to repay (no salary increases): ~15 years
5. With 3% annual salary increases: ~10 to 12 years
6. With $100/month voluntary extra payments: ~8 to 9 years

Example 1: Allowance vs Loan Comparison

1. Student A (gets allowance): Fees $21,000 loan + $0 living costs loan = $21,000 total debt
2. Student B (no allowance): Fees $21,000 + Living costs $36,600 + Course costs $3,000 = $60,600 total debt
3. Difference at graduation: $39,600
4. At $55K salary, Student A repays in ~6 years; Student B in ~15 years

Real-World Story: The Smart Non-Repayer

1. Compulsory repayments: 12% of ($72K - $24,128) = $5,745/year
2. Instead of extra voluntary repayments of $200/month...
3. ...invested $200/month into a diversified KiwiSaver growth fund at ~6% return
4. After 8 years: KiwiSaver extra = ~$24,000 (plus employer match)
5. Student loan still being repaid at 0% interest (free money)
6. Net benefit of investing vs extra repayments: approximately $8,000+

Who this happens to, and what it meant for them

It Is Taxable

1. NZ Super is paid fortnightly at the rate for your living situation
2. Tax is deducted using the code you provide
3. If you have other income, it sits on top of NZ Super
4. The combined total can reach a higher tax bracket
5. Choosing the correct tax code avoids a year-end surprise

How It Fits With KiwiSaver

1. NZ Super gives a steady fortnightly base income for life
2. KiwiSaver gives a lump sum you control from age 65
3. Together they fund a more comfortable retirement
4. Neither reduces the other

How to Apply

1. 1. Apply in the weeks before you turn 65
2. 2. Provide ID, IRD number and bank details
3. 3. Confirm your residency history and living situation
4. 4. Choose the correct tax code for your total income
5. 5. Payments begin fortnightly once you qualify

NZ Super and KiwiSaver

1. NZ Super (couple): ~$850/week net
2. KiwiSaver withdrawal ($400,000 over 25 years): ~$307/week
3. Combined: ~$1,157/week = ~$60,164/year
4. This is a comfortable but not lavish retirement income for a couple

Example 1: NZ Super Plus KiwiSaver

1. NZ Super (single, living alone): ~$550/week net
2. KiwiSaver drawdown ($280,000 over 25 years at 4% return): ~$280/week
3. Total retirement income: ~$830/week = $43,160/year
4. This is above the single-person poverty threshold and reasonably comfortable

Example 2: The Overseas Pension Deduction

1. NZ Super entitlement (single, living alone): ~$550/week
2. UK State Pension: $220/week
3. Direct deduction: $220 deducted from NZ Super
4. NZ Super payment: $550 - $220 = $330/week
5. Total income: $330 (NZ Super) + $220 (UK pension) = $550/week
6. John receives the same total as someone without an overseas pension

Special Levies

1. A major repair is needed, say re-cladding part of the building
2. The long-term maintenance fund does not hold enough
3. The body corporate strikes a special levy to cover the gap
4. Each owner pays their share, which can be thousands of dollars

A Simple Action Plan

1. 1. Find out the current levies for the unit
2. 2. Read the long-term maintenance plan and check the fund
3. 3. Review recent minutes and financial statements
4. 4. Ask whether any special levy is planned
5. 5. Include levies in your affordability budget
6. 6. Prefer a sustainable levy over the cheapest one

How the Income Test Works

1. There is a weekly income-free amount you can earn with no effect
2. Above that, the benefit reduces by a set rate per dollar earned
3. Earn enough and the benefit reduces to zero
4. A partner's income is included in the test
5. Current thresholds and rates are published by Work and Income

How to Apply

1. 1. Check your eligibility on the Work and Income website
2. 2. Apply online through MyMSD, or by phone
3. 3. Provide ID, IRD number, bank details and income information
4. 4. Supply a medical certificate if applying on health grounds
5. 5. Attend any appointment and confirm your obligations

How the Income Test Works

1. There is a weekly income-free amount you can earn
2. Income above that reduces the payment at a set rate
3. Earn enough and the payment reduces to zero
4. Being single is a condition, so a partner's income would end eligibility
5. Current thresholds are published by Work and Income

How to Apply

1. 1. Check eligibility on the Work and Income website
2. 2. Apply online through MyMSD, or by phone
3. 3. Provide ID, IRD number, bank and income details
4. 4. Provide your child's details and your relationship status
5. 5. Ask about Working for Families and the Accommodation Supplement

How the Income Test Reduces the Payment

1. There is a weekly income-free amount
2. Income above that reduces the payment at a set rate
3. A partner's income is included
4. The totally blind have different, more generous income rules
5. Current thresholds are published by Work and Income

How to Apply

1. 1. Check eligibility on the Work and Income website
2. 2. Apply online through MyMSD, or by phone
3. 3. Provide ID, IRD number, bank and income details
4. 4. Arrange the medical assessment for the disability ground
5. 5. Provide evidence of your caring role if applying as a carer

Why the Income Estimate Matters So Much

1. You estimate your family income for the year
2. Payments are made through the year based on that estimate
3. At year end, actual income is compared with the estimate
4. Underestimated income means a debt; overestimated means more is owed to you