In a letter to the National Pensioner’s Convention (NPC), the minister for pension reform, James Purnell MP, has admitted that the government is using the current surplus in the National Insurance (NI) Fund to pay for other government expenditure, rather than on improving the state pension.
The letter states that: “Where there is a surplus in the NI Fund, it is invested in gilts. If the surplus was used to increase benefits instead of investing in gilts, the government would need to raise the equivalent through other means such as raising taxes”.
The government actuary estimates the current balance in the Fund at £34.6 billion and forecasts that it will rise to £60 billion by 2010. Whilst the government is able to use the money they have borrowed from investing in gilts, the NPC is questioning whether it is right to allow the surplus to grow at a time when the value of the state pension continues to fall behind the rising costs of living.
Joe Harris, NPC general secretary, has said that: “The NI Fund was created to pay for pensions and benefits, with a small proportion also going to the NHS - but the government is now using the money that today’s employees and employers are putting in to finance general expenditure. This has got to stop”.
The National Pensioners Convention can be contacted on 020 7553 6510. E-mail: admin@npcuk.org or visit: www.npcuk.org.
Posted on behalf of Janet Harris