National Insurance Fund plundered to pay down national debt

9th January 2020 / United Kingdom
National Insurance Fund plundered to pay down national debt

The National Insurance Fund, ringfenced by law since its inception is being used to pay off the National Debt. Is the Government guilty of criminal activity going back to Blair’s time?


The National Insurance Fund (NIF) holds National Insurance Contributions (NICs), paid by employees, employers and the self-employed. Voluntary contributions are also paid into the fund. Receipts paid into the NIF are kept separate from all other revenue raised by national taxes and are used to pay social security benefits such as contributory benefits and the State Pension.

This is an excerpt from the Great Britain National Insurance Fund Account : (Source document pdf)

The National Insurance Act 1946 and National Assistance Act 1948 established the modern welfare state that continues today. As an important part of that, the NIF funds the State Pension as well as certain unemployment benefits, employment support benefits and other benefits in situations where the individuals meet the contributory and other qualifying conditions. Section 161(1) of the Social Security Administration Act 1992, as amended by the Social Security Contributions (Transfer of Functions, etc.) Act 1999, moved the management of the NIF from the Contributions Agency (overseen by the then Department of Social Security) to the management of the Inland Revenue (now HMRC). Under Section 162 of the Social Security Administration Act 1992, NICs received by HMRC are paid into the NIF after deducting the appropriate NHS allocation (see note 2). HMRC is required to consult with the Government Actuary to determine the appropriate apportionment, which is approved by HM Treasury. The Commissioners for the Reduction of the National Debt (CRND) are responsible, in accordance with Section 161(3) of the Social Security Administration Act 1992, for the investments of the National Insurance Fund Investment Account (NIFIA). They are authorised to invest in accordance with directions given by HM Treasury and in line with the Memorandum of Understanding between HMRC and CRND.


The amounts received into and paid out of the NIF and the resulting balance on the Fund depend on legislation, which is the responsibility of HM Treasury Ministers and the Secretary of State for Work and Pensions.

The Department for Work and Pensions (DWP) has overall responsibility for the award and payment of most benefits payable from the NIF, including those relating to retirement, bereavement, contribution-based Jobseeker’s Allowance and contributory Employment and Support Allowance.

In that extensive Fund Account report, not a single word is mentioned in the text or accounts that demonstrate that the National Insurance Fund is being used to pay off the National Debt, which currently sits at an eye-watering £1.84 trillion.

And yet:

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Freedom of Information Request confirms that billions from the funds have been paid into reducing the National Debt.


A Freedom of Information Request that surfaced regarding the fund confirms that billions have been paid into reducing the National Debt that successive governments have increased – most especially to combat the financial crisis caused by the banks.

This resulted in a closing balance of £24.2billion, which was paid into the NIF investment account and, in practice, used to reduce the national debt.”

Only last week, TruePublished a story entitled – “Gov’t calculates that National Insurance fund – which pays the state pension will run out by 2032.” This came on the back of another story published by the FT that clearly demonstrated British pensioners were receiving the worst state pension in the developed world. Here we found out that in just 12 years time, the National Insurance fund will not have enough money to pay its obligations and will see its reserves quickly depleted – requiring significant cash boosts from the Treasury.

FullFact said some time ago that – “claims (have been made that the) UK adults’ National Insurance Contributions (NICs) are being used to pay off the national debt. This is, in part, correct, but it doesn’t affect the amount of pensions or benefits people get in return for their NICs.” While this is true – if the diverted sums of something like £29 billion (just the sums transferred in 2017-18 and 2018-19) remained in the NIF – more could be paid out. And just because “no-one is getting less” as Full Fact states – this is hardly an argument when considering the low rates payable and rising elderly poverty.

So when there is a calculated surplus in the fund – the governments helps itself to pay the national debt which is now costing over £40 billion a year in interest payments alone. Don’t forget that the national debt of around £1.84 would be less than one trillion if it wasn’t for the banks causing a crisis in 2008.

Arguments given that all government liabilities are really one and the same are not fair either as there is no guarantee that repayments will be made back to the fund – but more likely taxes increased to cover shortfalls.

Another point is that the Women Against State Pension Inequality or WASPI’s have been deprived of significant amounts of this money given the unfair way the changes to the state pension (deferring payments to age 66 from 60) were implemented with inadequate or no notice. Nearly 4 million women are affected and many have campaigned against this decision by the government that will leave many in penury – and yet the money has been transferred to the national debt.

It is too far to state that the government is breaking the law – they make and change them to suit themselves just as has happened here. But in the hands of the Treasury or HMRC – this money is not ‘their’ money, it is entirely that of the taxpayer and should not be plundered to help cloak their mismanagement of the economy. If anything, the banks that have caused so much damage to civil society should be made to pay as few would shed tears for the suits in the City of London losing their bonuses.



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