National Insurance

Back to all Motions

2018 National Retired Members Conference
4 June 2018

The National Insurance scheme as established in 1948 to provide unemployment benefit, sickness benefit, retirement pension and various other benefits to employees and pensioners in the UK. Employed people who have not reached state retirement pension age and their employers contribute to the scheme through @National Insurance Contributions’ (NICs), which are based on a percentage of earnings. Self-employed people contribute partly by a fixed weekly or monthly payment, and partly on a percentage of net profits above a certain threshold. Individuals may also make voluntary contributions in order to fill a gap in their contributions record and thus protect their entitlement to benefits. From these contributions an initial allocations is set aside for the NHS and the remainder held in the National Insurance Fund (NIF) which is monitored by the Government Actuary.

The NIF is run on a pay as you go basis and legislation means that contributions to it can only be used for contributory benefits with any surplus held in a short term investment account. The surplus is estimated to be £26.2bn at 31 March 2019 (up from £24.2bn in October 2017). For some years the government has been borrowing from this surplus to fund other public expenditure thus reducing their need to borrow from other sources in order to ‘balance the books’. This means that the surplus cannot be used to improve benefits including the state retirement pension. The Organization for Economic Development reported in December 2017 that the UK population is ageing rapidly with high levels of relative poverty among the over 75s and with 20% of British over 80s classified as obese compared with 10% of Italians.

Conference notes the increasing level of this surplus and calls on the National Retired Members Committee to liaise with the NEC, the National Pensioners Convention Age UK, The Scottish Pensioners Forum and other relevant organizations to press the government to increase the basic state pension to a level above the official poverty line by 2020.