National Insurance

National Insurance was the beginning of the welfare state in the United Kingdom. It was started by the National Insurance Act 1911. The idea of insurance was attractive to the Prime Minister, Lloyd George, because it kept individual responsibility.

In Britain, there were flat rate contributions and flat rate benefits. In Europe, contributions and benefits were generally based on the worker's normal pay.^[1] It has changed a great deal since then.

In 1912, the workers who paid their National Insurance could visit a general practitioner and get medicine they were prescribed without paying. But this did not include their families.^[2]

People are given a National Insurance number, often called a NINo, when they are 16. They must have this to be allowed to work. Workers make regular payments calculated as a fraction of their pay. The payments are collected and recorded by HM Revenue and Customs.

Until 1973, people had a card for each year with stamps to show they had paid. After that, it was joined to the system for collecting income tax.^[3] This allows people to get benefits when they cannot work.

Contributions

People over retirement age do not pay anything for National Insurance.

There are four sorts of contributions (payments).

Class 1 contributions are paid by employers and their workers. Nothing is paid by people who earn less than £123 a week. Between £123 and £242 a week, workers get a credit but don't pay. Between £242 and £967 a week, workers pay 12%. Over £175 a week, employers pay 13.8% (including for people over retirement age).

Class 2 contributions are £3 a week paid by self-employed people.

Class 3 contributions are voluntary. People pay to improve their contribution record, usually to protect their pension.

Class 4 contributions are paid by self-employed people as a portion of their profits.

People who cannot work may get NI credits, usually when claiming benefits.^[4]

Benefits

The benefits with a contribution condition are:

• Bereavement benefit
• Employment and Support Allowance
• Jobseeker's Allowance
• Statutory Sick Pay
• UK State Pension