Government plans to grow the population to 100,000 might plug a shortfall in the National Insurance Fund in the short term – but it won’t solve the problem.

The NI Fund had been predicted to fall to zero in 2052-53, according to a review carried out in 2017, because of a growing shortfall between contribution and spending on benefits.

But a report by a UK government actuary, to be laid before this month’s Tynwald sitting, shows that the NI Fund will run out even sooner – by the year 2047-48 – if no action is taken.

The Fund is the third largest source of government revenue and pays for the majority of pensions and benefits as well as contributing to the funding of the Manx NHS.

It also played a key role in funding various government support packages during the Covid pandemic.

The growing shortfall between benefit payments and contributions is largely driven by the island’s increasingly ageing population, with fewer people of working age for each one who has reached pension age.

A 2021 report concluded there would be little public support for wholesale reform of the NI Fund.

Government is pinning its hopes on expanding the population from the current estimate of 84,120 to 100,000 and creating 5,000 new jobs.

The current population is estimated to be 84,120 but the actuarial report projects that to fall to about 83,250 by 2037, assuming net inward migration of 300 people a year.

Based on recent trends, the 100,000 population and extra 5,000 jobs envisaged in the island’s economic plan are unlikely to be achieved other than through much higher levels of inward migration, UK government actuary Michael Clarke notes.

He said that if a large proportion of the increased population were migrants of working age, NI contributions would increase in the short term and would not be immediately offset by a corresponding increase in benefit payments.

‘This would act to increase the size of the Fund and hence put back the fund exhaustion date,’ he said.

But he added: ‘However, over the longer term the migrants would become pensioners in receipt of a pension paid by the Isle of Man, which would then, in turn, increase future benefit outgo and act as a brake on the fund growth.’

Mr Clarke sets out an alternative scenario based on a high net inward migration of 600 people a year which would see the population grow to roughly 88,200 by 2037.

All else being equal, this would put back the fund exhaustion date by four years.

He said a much higher net inward migration of the order of 1,300 per year would be needed to produce a population of around 100,000 in 2037. The triple lock and the move to the new Manx State Pension are the other factors that are driving the growing shortfall between benefit payments and contributions.

Planned increases to the state pension age , to 67 and perhaps 68, would provide some mitigation, note the report.

Treasury has been consulting on changes to make NI contributions fairer so that all workers should pay regardless of how their affairs are structured.