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Graphic: An Encyclopaedia of New Zealand 1966.


This information was published in 1966 in An Encyclopaedia of New Zealand, edited by A. H. McLintock. It has not been corrected and will not be updated.

Up-to-date information can be found elsewhere in Te Ara.



Scope of Legislation of 1938

Although the Social Security Act of 1938 was built on schemes which had been evolved over a period of 40 years, it went considerably further by increasing existing benefits on a more uniform pattern, in making qualifying conditions less restrictive, and in creating new classes of benefits. Those responsible for the formulation of the social security scheme in New Zealand rejected the insurance concept and accepted the care and welfare of citizens as a national responsibility. Thus there was no matching of benefits with contributions; hence contribution to the Social Security Fund is not a condition for the receipt of a benefit. The restrictions which had hedged the granting of pensions had caused many people to feel that pensions were a form of charity. The term “pensions” had grown to be somewhat distasteful and was dropped in favour of “benefits”. Thus age pensions became age benefits, widows' pensions became widows' benefits, and so on.

A national social security consciousness had been growing steadily over the years, of which the Social Security Act of 1938 can be regarded as an expression. It should be noted, however, that this growth took place at two critical periods shortly prior to 1898 and 1938 when the country was recovering from, and still had memories of, very severe economic crises, which resulted in real hardship in the community.

Until 1938 New Zealand's pensions were confined to the aged, invalids, the blind, widows, and miners, with a limited system of family allowances. The Social Security Act introduced a new concept—namely, that every citizen had a right to a reasonable standard of living and that it was a community responsibility to ensure that its members were safeguarded against the economic ills from which they could not protect themselves. The inspiration of the Social Security Act was the determination to end poverty in New Zealand. A comprehensive system of benefits was thus established covering all the main economic hazards which in the past had been the cause of poverty. The Act of 1938 had three main objects: to substitute for the existing system of non-contributory pensions a system of monetary benefits to which citizens would contribute according to their means and from which they could draw according to their need; to provide a universal superannuation; and to inaugurate a universal system of medical care benefits.

The Act established a department of State called the Social Security Department under the control of a commission comprising not more than three members to administer the monetary benefits provisions, while the medical care benefits were to be administered by the Department of Health. Expenditure for cash benefits, health services and administration was to be financed on a current cost basis from the Social Security Fund which receives the yield from a 7 ½ per cent social security income tax on wages, salaries, and other income and grants from general taxation.

There are 10 different monetary benefits as follows:

  1. Superannuation benefit. This benefit, which is not subject to a means test, is payable to those attaining the age of 65 years and satisfying a residence condition which requires 20 years' residence in New Zealand immediately preceding application or, if actually resident on 15 March 1938, a term of 10 years.

  2. Age benefit. Subject to a means test, this benefit is payable to those attaining the age of 60 years or, for an unmarried woman unable to undertake regular employment, 55 years. The residence qualification is the same as for the superannuation benefit.

  3. Widows' benefit. Subject to a means test, this benefit is payable to a widow with a dependent child or children born in New Zealand or while the mother was temporarily absent from New Zealand. A widow who no longer has a dependent child or who has never had a child may qualify if she fulfils certain conditions as to age, duration of marriage, and residence. Married women who have been deserted by their husbands may qualify for benefit as though they were widows. For a married woman whose husband has been receiving treatment in a mental hospital for a period of six months or more, a special benefit is provided at the same rate and subject to the same residential and other qualifications as a widows' benefit. For the first six months of treatment, a benefit may be paid to the wife under the sickness or emergency benefits provisions

  4. Orphans' benefit. Subject to a means test, payment is made in respect of a child both of whose parents are deceased. Payment is made to the age of 16 years but may be continued to the end of the calendar year of the orphan's attaining 18 years, provided he remains at school. The residence requirement is met if the orphan were born in New Zealand or if its last surviving parent were resident in New Zealand for at least three years preceding death.

  5. Family benefit. Irrespective of means, this is payable in respect of a child under the age of 16 years. Payment may be extended to the end of the year of attaining the age of 18 years if the child continues education as a full-time student, or if he is totally incapacitated from earning a living. Benefit is normally paid to the mother, either in cash or by credit to her Post Office Savings Bank account, unless it is considered that it should be paid to the father or some other person having the care and control of the child.

    Effective from 1 October 1958, a new provision enabled payment to be made for up to 52 weeks in advance on the birth of the first child of a marriage or in respect of a child commencing his first year of post-primary education.

  6. Invalids' benefit. Subject to a means test, this benefit is for permanent incapacity for work or total blindness. An applicant must be at least 16 years of age and not qualified to receive an age benefit. An applicant is residentially qualified whose incapacity arose in New Zealand or who was resident in New Zealand on 4 September 1936 and has lived in New Zealand for at least 10 years immediately preceding the date of application, otherwise 20 years' residence is required. There is a right of appeal to a board of three registered medical practitioners against refusal of an application or cancellation of a benefit on medical grounds.

  7. Miners' benefit. This is payable, without a means test, to a person who has been employed as a miner in New Zealand for not less than two and a half years and who has resided in New Zealand for not less than five years immediately preceding application and, through having contracted miner's phthisis or other occupational disease associated with mining, or heart disease, is permanently incapacitated for work. Appeal rights are the same as for invalids' benefits. A benefit, free of means test, is provided for the widow of a person who dies while in receipt of a miner's benefit and a grant may be made in respect of the funeral expenses.

  8. Sickness benefit. Subject to a means test, this is payable in respect of temporary incapacity for work through sickness or accident but, in general, is not payable for the first seven days of incapacity. In order to qualify, an applicant must be not less than 16 years of age, must have suffered a loss of salary, wages, or other earnings, and have resided in New Zealand for at least 12 months. The rate of benefit cannot exceed the loss of earnings through incapacity.

  9. Unemployment benefit. Subject to a means test, this is payable to a person 16 years of age and over who has been in New Zealand for at least 12 months and is unemployed, is capable of and willing to undertake suitable work, and has taken reasonable steps to secure employment. A waiting period of seven days is normally imposed but benefit may be deferred for up to six weeks or terminated if the applicant has voluntarily become unemployed without just cause, has lost his employment through misconduct, or has failed to accept any offer of suitable employment.

  10. Emergency benefit. This is available where refusal of an application for one or other of the above-described benefits would cause hardship. Experience in the administration of pensions legislation prior to 1939 had shown that many people were denied assistance because they did not fully meet the requirements of the existing law and so could not qualify for State aid. The bulk of the people concerned were those who were medically unfit for sustained work or were not available for gainful employment and unable to earn a sufficient livelihood. The Social Security Act made provision for this wide and undefined class of person through the provision of an emergency benefit. In each case the amount of benefit and conditions attaching to the grant of benefit are determined by the Social Security Commission. The benefit was designed to cover any person who was not qualified to receive any other cash benefit under the Act but who, by reason of age, physical or mental disability, or for any other reason, was unable to earn a sufficient livelihood for himself and his dependants.

No two cash benefits, except a family benefit and one other, can be received concurrently.