Schedule 5 Social Security Act NZ: How the Cash Asset Test Affects Your Benefits
Most people know Work & Income does some form of means testing for benefits. What most people don't know is exactly how it works — specifically, which assets count toward the threshold, which don't, and what the actual numbers are.
This matters enormously if you've recently lost a partner and are trying to understand whether you qualify for a Surviving Spouse Allowance or other support. Getting the asset test wrong — in either direction — can leave you without benefits you're entitled to, or cause you to claim incorrectly.
What Schedule 5 Actually Does
Schedule 5 of the Social Security Act 2018 sets asset and income limits for specified Work and Income tests. It does not create one universal cash-asset test for every benefit; the applicable benefit rules determine which assets count. Work and Income's cash-asset definition is also set out in the Social Security Regulations 2018, including regulation 60 and Schedule 8.
The cash assets test is different from an income test. It looks at what you own, not just what you earn.
The Schedule 5 Asset Limits
For the current Schedule 5 Part 1 asset limits from 1 April 2026:
- Single person without dependent children: $1,411.22
- Person in a relationship, with or without dependent children: $2,351.46
- Sole parent with one dependent child: $1,853.00
- Any other sole parent: $1,990.47
These are Schedule 5 Part 1 limits. Other payments, including funeral grants and one-off-cost assistance, use their own current rules and thresholds. Confirm the relevant payment's rules with Work and Income.
If your assets exceed the relevant limit for a payment that uses an asset test, that payment may be refused or reduced until the applicable rules are met.
What Counts as Cash Assets
For a payment that uses a cash-assets assessment, Work and Income may count assets such as:
Financial assets:
- Bank account balances (savings and cheque accounts)
- Term deposits
- Shares and managed funds
- Government and corporate bonds
- Money invested with or lent to another person or financial institution
Other liquid assets:
- Proceeds from life insurance policies paid to the estate (see timing note below)
- Money owed to you (receivables)
- Foreign currency holdings
What's included that surprises people: KiwiSaver balances are not included in cash assets while they remain in KiwiSaver — but once withdrawn, those funds become cash and count toward the threshold. If you withdraw a significant KiwiSaver balance (as a surviving spouse you may be entitled to), the cash you receive changes your asset position.
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What's Excluded from Cash Assets
For payments that use a cash-assets assessment, common exclusions can include:
The big exclusions:
- A vehicle used for day-to-day living — treatment depends on the payment and its vehicle limits
- Personal effects and household goods — furniture, clothing, appliances
- Your primary home — the family home is not a cash asset (though it may be assessed differently for some benefits)
- Business equipment — tools of trade that are genuinely used for income-earning
Prepaid funeral expenses: These may be excluded in some circumstances; ask Work and Income how the relevant payment treats them.
Life insurance — the timing issue:
Life insurance proceeds land differently depending on how the policy was set up:
- If the policy named you personally as beneficiary (not "my estate"), the payout goes directly to you and becomes a cash asset immediately upon receipt
- If the policy was paid to the estate, it becomes part of estate assets and passes through administration — it becomes a cash asset to you when the estate distributes it
This timing distinction can matter significantly if you're applying for benefits shortly after the death and haven't yet received estate distributions.
How the Asset Test Works in Practice
When you apply for a benefit, Work & Income will ask you to declare all your assets and their approximate values. A case manager will assess whether your cash assets exceed the threshold.
If they do, the payment may be refused or reduced under the applicable rules. Ask Work and Income when to reapply if your asset position changes.
If you're close to the threshold, the timing of when you apply matters. If you've just received a large bank transfer from an estate distribution, you may be over the threshold temporarily.
Important: Do not understate assets to try to qualify for benefits. Work & Income has the ability to verify bank records and the consequences of providing false information are serious — including repayment of incorrectly received benefits and potential criminal charges for fraud.
What Happens When Assets Drop Below the Threshold
If your cash assets are currently above the relevant limit but you expect them to reduce, ask Work and Income how the applicable payment treats committed essential expenses and changes in your assets. Do not assume that a projected future balance will be used for the assessment.
It's worth calling their bereavement support line (0800 559 009) and asking how the relevant asset test applies during bereavement.
The Interaction with Survivor Benefits
This is where it gets complicated. As a surviving spouse, you may be entitled to:
- Surviving Spouse/Partner Allowance from Work & Income
- KiwiSaver early withdrawal
- Estate distributions
- Life insurance proceeds
- Possibly Veterans Affairs entitlements
Each of these affects your asset position differently and at different times. Receiving them in the wrong order, or failing to understand how each interacts with the asset test, can mean losing benefit eligibility you would otherwise have had.
The NZ Survivor Benefits guide maps out all these entitlements — their amounts, eligibility rules, asset test implications, and the sequence that makes sense for most surviving spouses.
Practical Steps
Before applying for any benefit:
- Get a clear picture of your current cash assets (bank statements across all accounts, investment account values)
- Understand when any expected estate distributions will arrive
- Note whether any life insurance policy paid you directly or via the estate
- Check how the relevant payment treats your vehicle and household goods
- Call Work & Income before applying if you're uncertain about your position — they can give an informal assessment without it going on record
When you apply:
Be thorough and accurate. Bring bank statements and a list of assets. If you're borderline, having a benefit advocacy worker present can help ensure the asset test is applied correctly.
After you're approved:
If you receive a lump sum (estate distribution, insurance payout) after you're already receiving a benefit, you must notify Work & Income. Receiving a lump sum that pushes you over the threshold means your benefit will stop until assets reduce again.
The Bigger Picture
The cash assets test exists to direct support to people who genuinely need it. The exclusions used by particular payments for a home, vehicles, and household goods reflect a practical recognition that forcing people to liquidate essentials to access benefits is counterproductive.
Understanding where you sit relative to the threshold is one of the first things to establish after bereavement. It tells you which applications to file immediately and which to defer while estate matters resolve.
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