The Ministry of Social Development has launched what it describes as a major shift in how it funds and supports budget services.

But Grey Power and budgeting advisers, who have seen the new contract fear, it will reduce services for clients, including the elderly.

One budgeting adviser said the new contract was geared towards getting younger people off benefits and back to work, rather than assisting the elderly on fixed incomes.

The adviser, who RNZ News agreed not to identify, said older people were vulnerable and many struggled to meet the cost of basics like medicines and rent.

Their medicines, Work and Income will purchase a quarter of the bottle because thats all the ability that Work and Income allow for, so the clients arent getting the pills because they havent got the money for it.

Now their rents have gone up. Ive got one superannuitant whose rent has gone up by $70 a week. Thats exactly what we had for food, they said.

Grey Power national president Tom OConnor said many elderly people hesitated to talk about their private income issues and didnt seek help until they were at crisis point.

At that stage the most important thing a budget service does is negotiate with the debtors to allow debts to be paid off in a manner that normally wouldnt be allowed.

The fact that a budgeting service has got involved generally gives the debtor some confidence that the debt will be paid off eventually, Mr OConnor said.

But he said those negotiations often took more than a couple of sessions.