The National Insurance Fund represents the funds of the National Insurance Scheme, set up by the British Government following World War II. In the Beveridge Report this was designed as part of a universal insurance system for all British people.
The funds are held in the National Insurance Fund (NIF), separate from Consolidated Revenue. Contributions are not "taxes" because they are not directly available for general expenditure by the government.
The income of the NIF consists of contributions from employees, employers and the self-employed, plus interest on its investments. The NIF is used to pay for social security benefits such as state retirement pensions, but not for the means tested Minimum Income Guarantee and Tax Credits. National Insurance contributions as a whole finance the National Health Service, but contributions are paid into the fund by the Secretary State net of moneys allocated to the NHS. Thus the NIF does not hold money directed for the general provision of health services in the UK. The government determines the total allocation for health each year and the allocation from each class contribution is calculated by the Government actuary.
Each year there is a surplus of the order of £2 billion. The NIF had a surplus of over £34 billion as at 2005/06, £38 billion... Read More