The report projects contribution income and benefit expenditure in future financial years and is a source of information for ministers and Parliament.
Fund projections
The Up-rating report includes projections of the Fund up to and including 2028 to 2029. It also looks at the:
effect on the Fund of the April 2024 up-ratings to benefits
effect on the Fund of changes to National Insurance rates announced at the Autumn Statement
short term sustainability of the Fund and whether additional financing is expected to be required
interaction with the Northern Ireland National Insurance Fund
The Up-rating report also considers the impact on the Fund of the determination not to lay draft Regulations. Therefore, the projections assume there will be no further changes in National Insurance contribution rates, limits and thresholds beyond those announced in the Autumn Statement.
Fund balance
The report sets out how the Fund balance is projected to peak at £84 billion at the end of the 2023 to 2024 financial year, before reducing each year thereafter up to 2028 to 2029. Benefit expenditure is estimated to exceed contribution income in every year of the projection period, resulting in a decreasing fund balance.
Despite this decreasing balance, it is not anticipated any additional financing will be required during this period under the principal assumptions.
The Government Actuary Fiona Dunsire said: “Higher than previously assumed employment and earnings assumptions mean that despite the reduction to National Insurance rates, additional financing is not expected to be required over the next 5 years.
“However, as highlighted in the 2020 Quinquennial review, the Fund faces longer term challenges. Most significantly, a projected increase in the number of state pension recipients, relative to the working age population, would increase Fund expenditure relative to income. In the absence of additional financing the Fund could be exhausted in the next 20 years.”
The Treasury has the ability to top up the Fund if needed via a transfer from wider government funds.
Longer term projections of the Fund (up to 2085) can be found in the most recent (2020) Quinquennial Review of the Fund which was published in March 2022. The effective date of the next Quinquennial Review of the Fund will be April 2025.
Additional information
The report contains variant projections to illustrate sensitivity of results to economic and policy assumptions. These variant projections include higher and lower earnings growth scenarios, and a scenario with higher CPI and lower earnings growth, which reduces contributions but increases benefit expenditure. The variant projections do not reflect current government policy.
2024 Up-rating Report
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