ACC has posted its largest-ever deficit, in part due to low interest rates.
Its annual result was an $8.7 billion accounting deficit, as it had to re-evaluate the present-day value of existing injury claims from $10.8 billion to $53 billion, due to falling interest rates.
"This is not a cash loss, and ACC continues to have more than enough funds to cover and support those who are injuried in accidents," said ACC board chair Dame Paula Rebstock.
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The fund recorded a $570 million cash operating surplus in the financial year to June 2018, and the impact of falling interest rates were lessened by its strong return on investments.
"The cash operating surplus demonstrates ACC's robust funding structure that enables the scheme to withstand volatility, including falling interest rates," said Dame Paula.
The fund achieved a 12.97 percent investment return, which increased its size to $44 billion.
It's too early to say what implications the deficit has for ACC levies, which the ACC Board will recommend to the Government next year. However, Dame Paula warns against any knee-jerk reaction as she says ACC has the time and ability to close the asset liability gap.
"We will be saying to the government that it should not over-react to short-term movements in interest rates, even if those interest rates right now are projected to be low for some period, and potentially could go lower."
Dame Paula hoped the deficit would not detract from ACC's operational highlights, as the scheme received a record 2 million claims, including those of Christchurch terror attack victims. It also increased its investment in injury prevention programmes to $75 million dollars and helped 55,000 injured clients return to work within 10 weeks.
"Falling interest rates are outside of our control and alongside growing claims and cost pressures, made it difficult to meet our performance targets, but we remain focused on what we can control - improving prevention, rehabilitation, customer experience and outcomes," Dame Paula says.
She also thanked Chief Executive Scott Pickering and his team for their "leadership and hard work" in supporting the survivors and families affected by the March 15 attack.
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