National insurance contribution
The welfare state in the United Kingdom was built on the principle of National insurance contributions. In order to qualify for certain benefits the claimant, or in some cases their partner, must meet contribution conditions.
The system of contributions started with the National Insurance Act 1911 and was further developed as a result of the Beveridge Report in 1942.
The contributions component of the system, "National Insurance Contributions" (NICs), paid by employees and employers on earnings, and by employers on certain benefits-in-kind provided to employees. The self-employed contribute partly by a fixed weekly or monthly payment, and partly on a percentage of net profits above a certain threshold. Individuals may also make voluntary contributions, in order to fill a gap in their contributions record and thus protect their entitlement to benefits. Contributions are collected by HM Revenue and Customs (HMRC) through the PAYE system, along with Income Tax and repayments of Student Loans.
People in certain circumstances, such as caring for a severely disabled person for more than 20 hours a week or claiming unemployment or sickness benefits, gain National Insurance credits.
See National Insurance for more details of the operation of the National Insurance Fund and liability for contributions.
The benefit component comprises a number of contributory benefits of availability and amount determined by the claimant's contribution record and circumstances. Weekly income benefits and some lump-sum benefits to participants upon death, retirement, unemployment, maternity and disability are provided.
Benefits for which there is or was a contribution condition:
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