The Veterans' Support Bill will introduce two schemes for veterans' support - one for veterans involved in pre-1974 conflicts such as World War II and Vietnam, and one for veterans of conflicts after 1974, when ACC was introduced.
Scheme One, which will kick off in July next year, will retain coverage for veterans with an impairment, and for their families.
At present, the 11,000 veterans on a War Disablement Pension receive around $214 a week.
Scheme Two will begin in July 2015 and will focus on modern deployments. This group of veterans are expected to be the larger within five to 10 years.
The second scheme will be more closely aligned to modern disability schemes by emphasising rehabilitation for former Defence Force workers who suffer from a physical injury or psychological issues.
This means they will have greater support to get back to their pre-injury capabilities, instead of simply being paid compensation. It is also designed to reduce dependency on war pensions.
Officials said: "Currently, a veteran aged in their early 20s can be awarded a periodic pension under the 1954 [War Pensions] Act, and be paid a pension for that disability for the rest of their lives. This can result in a 60-plus year dependency on support from the state, with no provision for rehabilitation."
Veterans under 65 who are unable to work because of an injury will be paid 100 per cent of their pre-injury earnings for a year, and then 85 per cent of their earnings in following years.
This compensation is higher than the ACC scheme paid to other New Zealanders.
The reforms will also make it easier for veterans to get access to services such as home help and lawn-mowing by lowering the threshold required to get assistance.
The Government has already committed $60 million over five years to support the changes.
At present, around 17,000 veterans and spouses receive some form of support in New Zealand.
