Nearly 50,000 beneficiaries whose accommodation supplements were underpaid over two decades will start to receive reimbursements this week, in some cases thousands of dollars.
The incorrect payments date back to 1993, and the mistake was discovered in 2014 and revealed earlier this year.
Social Development Minister Anne Tolley says 49,000 current and former Work and Income clients are eligible for payments due to the coding error.
Twenty-two-thousand current clients will receive a total of $14 million in reimbursements, with all the payments expected to be made by the end of the year, accompanied by a letter of apology from the Ministry of Social Development.
It’s estimated that 27,000 former clients were underpaid a total of $15 million, and starting next week former clients will be able to go online at the MSD website to assess their eligibility and to take part in the process to receive back payments.
This online service will continue for at least six months, after which it will be reviewed.
'The government is doing the right thing by everyone affected'
Sixty-five-thousand current and former clients who were overpaid a total of $53 million as a result of the error will not have to return any money.
"I was made aware of this issue after asking MSD to review its practices to ensure they were in line with legislation," Mrs Tolley said.
"While we can't go back and change an error from 23 years ago, the government is doing the right thing by everyone affected."
Cabinet has agreed to exempt these lump sum payments from asset-testing for 12 months to ensure they don't affect a person's benefit payments, the Minister said.
The average reimbursement for current and former clients is estimated at around $590, while 48 clients will receive $10,000 or more.
The highest amount is $28,500, which is being paid to a New Zealand Superannuation client.