Future years on benefit

MSD has commissioned actuarial consultants Taylor Fry since 2017 to develop a Social Outcomes Model on how New Zealand adults move into, through, and out of the benefit system over their lifetime including estimating the future years on benefit for different population groups.

The Social Outcomes Model is part of a range of advanced research and analysis that we draw on to inform our employment strategies, to target investment and to understand the characteristics of people receiving income and housing support.

A 2023 paper from Taylor Fry drawing on September 2022 modelling has been released under the OIA and is available here. Please see below for a table with the full range of estimates from the Social Outcomes Model for different population groups.

The Social Outcomes Model is developed in the Integrated Data Infrastructure (IDI)¹ and uses data from many government agencies together with Treasury’s economic assumptions to project a range of social outcomes including the estimated future years on benefit.

Average estimated future years on main benefit to age 65 by benefit category

This estimate does not include any time already spent on benefit

Benefit	Cohort	September 2021 estimate	September 2022 estimate
Jobseeker Support	All Jobseeker Support	11.7	12.7
Jobseeker Support	Work Ready	11.7	13.0
Jobseeker Support	Health Condition and Disability	11.8	12.3
Jobseeker Support	Aged under 25 years	16.7	18.9
Sole Parent Support	All Sole Parent Support	15.5	17.0
Supported Living Payment	All Supported Living Payments	12.7	12.7
Youth Payment/Young Parent Payment	All Youth Payment/Young Parent Payment	20.8	24.0
All Main Benefits	All main benefit	12.8	13.6
All Main Benefits	Under 25	19.1	21.3

Young people on Youth Payment and Young Parent Payment are estimated to have the longest estimated future years on benefit in the 2022 projections, highlighting that people who need early support are more likely to need ongoing support for longer. They are a relatively small group, with around 2,940 people on these benefits as at March 2024. Youth Benefits include Youth Payment (for those aged 16-17) and Young Parent Payment (aged 16-19²) .

Main benefits include Emergency Benefit, Emergency Maintenance Allowance, Jobseeker Support (except for Jobseeker Support Student Hardship), Sole Parent Support, Supported Living Payment, Youth Payment and Young Parent Payment.

The 2022 projections are informed by the rate at which people leave the benefit system, changing economic conditions, and the characteristics of clients.  The increase from 2021 was driven by less favourable economic forecasts (including higher unemployment rates), lower exit rates and changes in our client mix from those requiring support during the COVID-19 pandemic.

The estimated average future years on benefit was published in the 2018/19 MSD Annual Report and has been updated each year in subsequent Annual Reports.

MSD has shifted priority from publishing the Taylor Fry report in full to using the content and, more crucially, analysis from the underlying Social Outcomes Model to feed into numerous pieces of separate advice. For example it has been used in the Insights Reporting Series on Young people 16–24 years old. The reports have been used to highlight areas to focus on, help inform discussions, and then commission smaller deliverables using an iterative approach to deliver high value.

 

How do future years on benefit compare with how long people are currently on benefit?

MSD regularly publishes administrative data on “continuous duration” that shows the average time a person has spent continuously on a main benefit. 

Where someone has gone off benefit for a period of time, their continuous duration is reset to zero when they come back on benefit.

Average future years on benefit are an estimate over someone’s future lifetime which is not always continuous. The average future years measure can be a much higher figure than the past average continuous duration measure. 

Direct comparisons aren’t possible between these two measures. One is backwards looking at a point in time, one is future looking over the remainder of a person’s life to 65 years old.

¹ IDI Disclaimer: These results are not official statistics. They have been created for research purposes from the Integrated Data Infrastructure (IDI) which is carefully managed by Stats NZ. For more information about the IDI please visit www.stats.govt.nz/integrated-data. The results are based in part on tax data supplied by Inland Revenue to Stats NZ under the Tax Administration Act 1994 for statistical purposes. Any discussion of data limitations or weaknesses is in the context of using the IDI for statistical purposes and is not related to the data’s ability to support Inland Revenue’s core operational requirements.

² Please note that occasionally someone might continue receiving these payments after they turn 20. See more: Young person turns 20 years old - Map (workandincome.govt.nz)