The war pension legislation of New Zealand was consolidated in the War Pensions Act 1954 which, with its subsequent amendments, is the legislative authority for the payment of war pensions and allowances, and of pensions for members of peacetime armed forces, and others. The power to grant pensions and allowances is vested in a War Pensions Board of three members, one of whom is a registered medical practitioner, and another a representative of members of the forces appointed by the Minister in Charge of War Pensions on the nomination of the New Zealand Returned Services' Association. The legislation is administered, subject to the general direction and control of the Minister in Charge of War Pensions, by the Secretary of War Pensions who is an officer of the Social Security Department. Pensions and allowances are paid out of the revenue of the country from general taxation. The current war pension programme is largely the outcome of New Zealand participation in two World Wars in which large numbers of citizens served as members of the forces in and outside New Zealand.

The original authority for payment of pensions in respect of service with the forces was contained in the Military Pensions Act of 1866 which was enacted to regulate the granting of pensions to members of the colonial forces for wounds or injuries received in actual service, and to the widows and families of deceased members in certain cases. These provisions were subject to several alterations and the law was later consolidated by the passing of the Defence Act of 1909. Under this Act the maximum pension payable for total and permanent disablement could not exceed 21s. a week for a private. There was no provision for the payment of a pension for the dependants of a disabled soldier, and the provisions for the widows and other dependants of deceased servicemen were very restrictive. In fact, before a widow could receive a pension, it was a necessary condition that the husband should have been killed in action or died of wounds within 12 months of being wounded. Even then the widow's pension was not conferred as of right, but was payable only if she was not “in wealthy circumstances”. The relatively low rates of pension can be gauged by the fact that the maximum pension for the widow of a private or non-commissioned officer was £36 a year, with a further £10 a year for each dependent child.

It was not until after the commencement of the First World War, 1914–18, that a comprehensive scheme was implemented, through the War Pensions Act of 1915, to provide pensions and allowances for members of the First New Zealand Expeditionary Force and their dependants. From time to time the scope of the 1915 Act was extended by various amendments to cover the growing needs of disabled ex-servicemen and their dependants. The investigations of two commissions of inquiry, one in 1922 under the chairmanship of J. R. Bartholomew, S.M., and the other in 1930 under the chairmanship of J. S. Barton, S.M., had important influences on subsequent legislation. A landmark of note was the passing in October 1935 of the War Veterans' Allowances Act, making special provision for those who, having served with a unit in actual engagement with the enemy, had become unfit for permanent employment.

Following the outbreak of the Second World War in 1939 the War Pensions Extension Act 1940 was passed (later amended to include members of the Emergency Reserve Corps) to ensure that the existing legislation would be available to servicemen of the new war. Separate but similar provision was made for members of the Mercantile Marine through the War Pensions and Allowances (Mercantile Marine) Act 1940. A comprehensive review of the whole legislation was again undertaken, and the War Pensions Act of 1943 incorporated existing measures relating to pensions and allowances and generally improved rates and conditions. In October 1950, as a result of demands for better and more adequate pensions, a further commission under the chairmanship of E. A. Lee, S.M., was set up to examine the justice and adequacy of existing war pension legislation. As a result of the findings of this commission, many improvements in rates and conditions were made and eventually incorporated in the current operative authority (the War Pensions Act of 1954 and its amendments).