Up-rating Report 2025 - report on the National Insurance Fund
Source: gov.uk (2025-01-15)

GAD’s annual report on the National Insurance Fund projects contribution income and benefit expenditure up to the end of the 2029 to 2030 financial year.

The Government Actuary’s Department (GAD) has published the 2025 Up-rating Report (https://www.gov.uk/government/publications/report-to-parliament-on-the-2025-re-rating-and-up-rating-orders). It is the annual report on income and expenditure projections for the National Insurance Fund of Great Britain.

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 2029 to 2030. It also looks at the:
- effect on the Fund of the April 2025 up-ratings of State Pension and working age benefits paid from the Fund
- effect on the Fund of changes to National Insurance rates announced at the Autumn Budget and other changes
- short term sustainability of the Fund and whether additional financing is expected to be required
- sensitivity of the results to economic and policy assumptions (these variant projections do not reflect current government policy)
- interaction with the Northern Ireland National Insurance Fund
This report also allows for the changes to National Insurance contribution rates (NICs) and thresholds which were announced in the March 2024 fiscal event, after the publication of the previous January 2024 report.

The projections assume there will be no further changes in National Insurance contribution rates, limits and thresholds beyond those announced in the Autumn Budget 2024.

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Fund balance

The report sets out how the Fund balance is projected to reduce to £76 billion at the end of the 2024 to 2025 financial year, before increasing each year thereafter up to 2029 to 2030 as the new rates take effect.

Contribution income is now estimated to exceed benefit expenditure in every subsequent year of the projection period, resulting in an increasing fund balance.

It is not anticipated any additional financing will be required during this period under the principal assumptions.

Government Actuary Fiona Dunsire said: “Without the changes to National Insurance rates and thresholds announced at the Autumn Budget, additional financing would have been expected to be required over the next 5 years. The increase in rates means that this additional financing is no longer anticipated over the projection period and the fund is in a healthier position.

“However, as highlighted in the 2020 Quinquennial Review, the Fund faces longer term challenges. Most significantly, the projected increase in the number of state pension recipients, relative to the working age population together with the operation of the Triple Lock, were expected to increase Fund expenditure relative to income. These demographic factors are still likely to lead to a reducing Fund balance in the long term.”

Longer term projections of the Fund (up to 2085) can be found in the most recent (2020) Quinquennial Review (https://www.gov.uk/government/news/quinquennial-review-2020) of the Fund which was published in March 2022. Since then, there have been a number of changes to NICs as well as a period of unusually high inflation. The next Quinquennial Review of the Fund (publication date to be determined) will provide an update to these longer term projections over the period starting April 2025.