About 150,000 beneficiaries are missing out on a total $200 million a year because they don't know what they're entitled to or don't know how to claim it, Newshub reports.
The figures, obtained under the Official Information Act, were revealed on Newshub's The Nation programme on Saturday.
Social Development Minister Anne Tolley, appearing on the programme, was asked whether there were too few staff to make sure beneficiaries get what they're due.
"No. We've got 120,000 (beneficiaries) now who are individually case managed," she said.
"Those case managers do their very best to make sure that everyone gets what they're entitled to."
Questioned about some people having to fill in 10 forms, Mrs Tolley agreed that in some cases the system was too bureaucratic.
"We're doing our very best... but there are a lot of people, there are a lot of interactions."
Labour's social development spokeswoman, Carmel Sepuloni, said entitlements were being withheld because of a culture that had developed within Work and Income.
Mrs Tolley: "That's a terrible thing to say."