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 defines what counts as "cash assets" for the purpose of Work & Income's asset testing. It's the legal foundation for the means test applied to most non-superannuation benefits.

The cash assets test is different from an income test. It looks at what you own, not just what you earn.

The Cash Asset Thresholds

The threshold for cash assets depends on your living situation:

• Single person (no children): $1,175.73
• Single person with dependent children: slightly higher (varies)
• Couple: $2,351.46

These figures are indexed and updated periodically. The $2,351.46 figure for couples is the current threshold as at 2026 — check Work & Income directly for the most current numbers.

If your cash assets exceed the threshold, you generally won't be eligible for most income-tested benefits until those assets reduce to below the threshold.

What Counts as Cash Assets

Under Schedule 5, the following are included in the cash assets calculation:

Financial assets:

• Bank account balances (savings and cheque accounts)
• Term deposits
• Shares and managed funds
• Government and corporate bonds
• Cash on hand above $200

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that surprises people: KiwiSaver balances are not included in cash assets while they remain in KiwiSaver — but once withdrawn, those funds become cash and count toward the threshold.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.

What's Excluded from Cash Assets

Schedule 5 carves out several categories that don't count:

The big exclusions:

• Your first car — one motor vehicle is exempt regardless of its value
• 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 bonds: A prepaid funeral bond may be excluded up to the approved value. This exclusion exists precisely because the government doesn't want people to be forced to cash these out to access benefits during grief.

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, they'll typically decline the benefit application and advise you to reapply when your assets reduce to below the threshold. There's no penalty for being over the threshold — you simply don't qualify until your 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 threshold but you expect them to reduce (because you're using savings to cover living expenses), you can apply for a benefit and explain your situation. Work & Income may assess you based on projected asset levels or defer assessment.

It's worth calling their bereavement support line (0800 559 009) and asking how they handle this — the rules allow for some discretion in how asset tests are applied during bereavement periods.

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:

1. Get a clear picture of your current cash assets (bank statements across all accounts, investment account values)
2. Understand when any expected estate distributions will arrive
3. Note whether any life insurance policy paid you directly or via the estate
4. Check that your first car and household goods are not included in your calculation
5. 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. Schedule 5's exclusions — your home, your car, your household goods — reflect a practical recognition that forcing people to liquidate these 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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