National Insurance explained What you'll get

NI should cover you in the event of unemployemt

Some social security benefits, including the basic state pension, are available only to people who have paid, or been credited with, enough contributions.

Different classes of National Insurance buy different benefits.

Full basic pension

If you reached state pension age before 6 April 2010, to receive the full basic pension, you will have to have paid, or been credited with, contributions for 44 years (90% of your working life between 16 and 65) for men and 39 years (90% of your working life between 16 and 60 for women).

Rules change after 2010

However for anyone reaching state pension age on or after 6 April 2010 the rules are different. 

Men and women only have to build up 30 years' worth of credits to get a full basic state pension. 

The state pension age for women is changing from 2010, too. For women born after April 1950 it will slowly rise over an eight-year period, until November 2018, when the age for both men and women will be 65. 

State Pension age for men and women will increase from 65 to 66 between April 2018 and April 2020, then to 67 and eventually 68.

What these changes mean

These changes have serious implications for anyone considering making voluntary Class 3 NICs to fill gaps in their contributions record. 

Those retiring after 2010 are far less likely to get a reduced pension than those who reach state pension age before this date. In all cases it is worth getting a pension forecast from HMRC and advice from the Pensions Advisory Service before taking action.

For more guidance, see the Which? guide to planning your retirement.

Jobseeker’s allowance 

If you are unemployed, you can claim Jobseeker’s Allowance (JSA). 

Contribution-based JSA

You should be eligible for contribution-based JSA if you have paid or been credited with sufficient National Insurance contributions. This ceases after six months. It is counted as taxable income. 

Income-based JSA

If you do not qualify for contributory JSA, you may get income-based JSA instead. 

This is means tested, so what you get is based on your income and savings. Your payments might be reduced if you earn income from part-time employment. You’ll get less than the full amount if you have savings of over £6,000. 

If you have savings of over £16,000 to probably won’t qualify for income-based JSA at all. Check with your local JobCentre Plus for full details of rates and eligibility

Employment and support allowance

A benefit that pays out in the event of physical or mental illness, this has replaced Incapacity Benefit and Income Support paid on incapacity grounds. 

Entitlement conditions are broadly similar to those for Jobseeker's Allowance and based on your contributions record in the case of contributory ESA but not income-based.

For more details, see Direct Gov's information on support allowances.

Bereavement benefits

Entitlement is based on the NI record of your spouse (most will qualify). A one-off payment of £2,000 is available, but only if your late spouse wasn't entitled to the basic state pension or you were under state pension age when they died.

Widowed parent's allowance is paid from the time of death while the surviving spouse is pregnant or caring for dependent children. It stops early if you remarry or cohabit. 

Where you have no dependents, bereavement allowance is paid for a year after death to those aged between 45 and state pension age. Again, it will stop early if you remarry, cohabit or reach state pension age.

Chartered Institute of Taxation

Which? is grateful for assistance from the Chartered Institute of Taxation in compiling this guide. For details of the Institute and its work, see www.tax.org.uk