Photo: RNZ / Quin Tauetau
MSD has revealed it has been paying a fifth of beneficiaries and other clients surveyed too little.
Among those worst affected was couples with children - with many being paid either too much or too little.
The Ministry of Social Development today released the results of its first survey of who has been getting full and correct entitlements.
Overall, four out of 10 people were not getting the right amount.
MSD ending up paying a fifth of people more, and eight percent less than the correct sum.
Most people who received major benefits - like Jobseeker or sole parent - had been being paid correctly, but there were bigger problems with minor payments, such as the disability allowance or accommodation supplement.
The main problem was keeping up with people's changing circumstances, and clients who had less contact with it - such as non-beneficiaries - were more likely to not be getting the right amount, it said.
Survey respondents told the ministry about barriers.
"Clients reported that when a child or dependant was involved, the wait times for documentation sometimes discouraged them from applying for income support."
MSD group general manager of income Shannon Soughtton said the year-long survey covered just 1400 volunteers, which was too small to be representative.
Still, it was useful as MSD worked on its $2 billion Te Pae Tawhiti overhaul of the welfare system
"MSD has increased its interactions with a number of clients, particularly Jobseeker Support clients, giving people more opportunities to discuss their circumstances with us," she said.
"All clients have an obligation to tell MSD of any changes in their circumstances."
Nelson Beneficiaries and Unwaged Workers Trust manager Kay Brereton said the results showed case managers should be better trained.
"One in five people were receiving less than they were entitled to, and a lot of people didn't know what they were entitled to, and in some cases neither did case managers.
"The system should make sure they are getting what they are entitled to every week."
It was too much to expect people to know what their entitlement should be, she said.
Brereton noted the prevalence of wrong payments to sick and disabled people.
"They're the people who find the system the most challenging, the people who have to provide the most verification and paperwork.
"So the wrong people are missing out. No one should be missing out."
The survey showed 11 percent were getting the wrong amount, but this was not adjusted. Most of these chose not to apply for anything extra mainly due to not providing the right documentation, or the amounts were too small to bother. Other corrections occurred outside the survey period.
The ministry said it had been difficult to get people to take part in the survey because it might mean an overpayment showed up, "so there was a potential for a financial impact on those who took part".
The National Beneficiary Advocate Consultative Group said it had helped get people to respond.
"While not necessarily representative, we believe the study still has value by outlining key themes on reasons people are not receiving their full entitlement."
The group was monitoring the accuracy of processing of entitlement assessments using a fortnightly random sample.
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