National Insurance Contributions

Deductions from paychecks or other payments made to National Insurance in the United Kingdom. National Insurance pays for the state pension, unemployment benefits and also funds the National Health Service. Both employees and employers must make National Insurance contributions, and employers must make further contributions on certain employee benefits. They do not fund other government functions, but the government may borrow against them.

national insurance contributions

the payments made by employers and their employees to the UK government up to a specified maximum limit. National insurance contributions, together with other government budgetary receipts, are used to finance state pensions, sick pay, jobseekers allowance, etc.

There are currently (2005) four classes of national insurance contributions; Class 1 (employees/employers), Class 2 and 4 (self-employed) and Class 3 (voluntary organizations). Under the most common class, Class 1, contributions are paid by employees at the rate of 11% on weekly earnings between £89 (minimum) and £585 (maximum); employers' contributions are paid at the rate of 12.2% on weekly earnings of employees greater than £84, with no upper limit. See BUDGET (GOVERNMENT), SOCIAL SECURITY BENEFITS.

national insurance contributions

the payments made by employers and their employees to the UK government, on a two-thirds and one-thirds basis respectively up to a specified maximum limit. National insurance contributions, together with other government budgetary receipts, are used to finance state pensions, social security benefits, the JOBSEEKERS ALLOWANCE, etc. See BUDGET ( GOVERNMENT).

Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005

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