Accommodation Supplement error – Questions and answers

How did the error happen?

The error happened because MSD ended up with a mismatch in the system where the costs recorded didn’t match with the type of accommodation. For example, the type of accommodation might say rent but the costs were for board. This generally happened if someone changed from paying board to rent, rent to mortgage repayments etc.

People who have always paid one type of accommodation costs, like rent, weren’t affected.

We made changes to the system in December 2014 so this error can’t happen again.

Who was affected?

The error affected clients who:

• got Accommodation Supplement before December 2014, and
• moved between renting, boarding and living in their own home.

Because different types of accommodation are paid at different rates, the mismatch meant some people were overpaid while others were underpaid.

People who were overpaid because of this error don’t have to pay the money back. We are now able to pay people who were underpaid.

How many people were affected?

Our analysis shows around 114,000 people who received the Accommodation Supplement historically over the 21 year period had discrepancies that affected their payment.

Of these, about 49,000 people had been underpaid over the period, with total underpayments of around $29 million, and about 65,000 people had overpayments of around $53 million. The vast majority of underpayments are less than $1,000.

The 94 current clients who were continuing to be underpaid were put onto the correct rate in early June.

A small number of people (approximately 180) are currently being overpaid. We’re now in the process of contacting them individually to check their current circumstances, work through what this might mean for them, and look at what other types of assistance they may be eligible for once they’re moved onto the correct rate of Accommodation Supplement.

There are currently around 290,000 people receiving Accommodation Supplement totalling around $1.1 billion a year.

Why has this taken so long to resolve?

We needed to do a thorough review to understand the impacts of the system issue and determine which clients have been affected. The length of time the error occurred over, and the number of people affected made this challenging. We then had to work out how best to resolve the issue for affected clients, and ensure we could do this within legal parameters.

Do people who have been overpaid need to repay the money?

No, because the overpayment was caused by our mistake, people won’t have to repay this money.

Current clients:

When will current clients who are owed money get paid?

By the end of November we expect to have paid all current clients who are owed money.

Why do people who are only getting childcare assistance, Child Disability Allowance, Orphan’s Benefit and Unsupported Child’s Benefit need to enquire?

We want to make sure we have their current bank account details. Childcare and OSCAR subsidies are paid to the provider, not the parent. Many people have Child Disability Allowance and Unsupported Child’s Benefit paid into a different account (perhaps in the child’s name). We want to make sure we pay the money into the correct account.

How will current clients know if they aren’t owed money?

We will have contacted current clients who are owed money by the end of November. If they haven’t heard from us by then this will be because they aren’t owed money as a result of this error.

The only exception is people who are only getting:

• Child Disability Allowance
• Orphan’s Benefit
• Unsupported Child’s Benefit
• Out of School Care and Recreation (OSCAR) subsidy
• Childcare Subsidy

These clients should use the online tool to check if they’re owed money.

Former clients:

Why do former clients need to enquire? Why can’t you just pay them in the same way you are paying current clients?

We can’t write to former clients as we don’t have their current contact details and there are privacy concerns about sending personal information to a last know address.

Can former clients ring up or go into a service centre to check if they’re owed money? Why do they need to use the website?

We’re using the online tool to make it as easy as possible for people to enquire, while at the same time maintaining our level of service to current clients. Staff in our contact centre and service centres can’t check if people are owed money or how much.

The tool on the website is very easy to use. People don’t need an email address, but we will need their address, and a phone number so we can contact them if we need to.

They can use a computer at a library, or a friend or family member’s computer or smartphone that can access the internet. Or they can come into a service centre and use a kiosk, and our staff can help them.

If people are owed money, will the website tell them how much?

No, it will only say if people are owed money as a former client, not how much. Our staff in contact centres and service centres can’t tell people if they’re owed money or how much it is either.

Why are you asking for people’s IRD number?

It is to help identify people as they may not know their Work and Income client number.

Impact of payments on benefits and tax

Will these payments affect people’s current benefits and allowances?

This payment won’t be included in any income or asset tests we do for 12 months.

Do people need to pay tax on these payments? Will it affect their Working for Families payments?

No, Accommodation Supplement payments are tax free and excluded from Working for Families income calculations. However any interest they earn from that money is counted as income.

Other questions

How have you identified people who were affected?

We have checked back through our records to find anyone who had the two different Accommodation Supplement codes at any stage. We’ve then calculated what they should have been paid, and compared it with what they were paid

How have you calculated the amount that has been underpaid or over paid?

We have recalculated payments based on the information on people’s files at the time of payment.

How do you know the money will be paid out to the right person?

We’ll check the information provided through the online tool with what we hold on our records. If it doesn’t match we will contact the person for more information.

If people are applying on behalf of someone else, or for a person who has died, we will ask for information to show they are the authorised person who should be paid

Is the website and online tool secure?

We have completed a robust security risk assessment on the website tool and it meets all government guidelines.