"IGMS will enable better immigration services to be provided at lower cost by replacing an expensive, inflexible system with a new operating model."
It is hoped the new system will help attract and retain skilled migrants and improve border security.
The BIM also outlines how the department planned to cope with reduced funding in the next four years, including the Cabinet-enforced annual reduction by $7m in funding from 2012/13.
The department aims to save 1 per cent a year in administration and support costs.
The department, as well as Treasury, recommended that the Government consider amending the settings to NZ Superannuation to encourage older people to stay in the workforce for longer.
It noted that in 2061, one quarter of the population will be over 65 years old or older, compared with only 13 per cent last year.
"Building opportunities for all working-age people to be in employment would help manage [labour force] supply constraints," the report said.
"The Department's analysis suggests that increasing the participation rates of older workers would make a much bigger contribution to increasing labour supply than would expanding immigration."