You pay National Insurance Contributions (NICs) to build up your entitlement to certain social security benefits, including the State Pension. The type and level of NIC you pay depends on how much you earn and whether you're employed or self employed. You stop paying NICs when you reach State Pension age.
Who pays National Insurance?
Like income tax, national insurance contributions depend on the amount of your earnings and are worked out by your employer. Money collected in national insurance is used to help pay for government social services, such as health and state retirement pensions. What you pay is recorded by the Inland Revenue, and used to calculate the amount of pension you receive when you eventually retire. You will see your employer's national insurance contributions also mentioned on your payslip. These are payable by the employer on your behalf and are not deducted from your pay.
You pay NICs if you are an employee or self-employed and you are aged 16 and over, providing your earnings are more than a certain level. You stop paying NICs at State Retirement age. This is currently 65 for men and 60 for women but will gradually increase to 65 for women over the period 2010 to 2020. Entitlement to many benefits depends on your National Insurance contribution record.
