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National Insurance

National Insurance Contributions (NIC) are taxes paid by British employees and employers to fund government benefits programs, including state pensions. The contributions are made through payroll deductions. 


Understanding the NIC 


The National Insurance (NI) system was created in 1911 to provide assistance to workers who were sick and unemployed. A series of expansions in the 20th century extended its reach to add funding for the National Health Service, the public retiree pension plan, and unemployment benefits. 


British workers pay their share of NI contributions to build up an entitlement over time for later payment of a state pension and other government benefits such as a maternity allowance.  


Employees can make voluntary additional NI contributions in order to qualify later for a higher state pension amount. Self-employed people and British citizens working outside the country also can make voluntary contributions to build towards pension eligibility. 


An employee who works or expects to work fewer than 35 years will not qualify for the maximum state pension benefit without making additional voluntary payments. The maximum pension benefit in 2020 was about £215 per week. The payout may be higher for employees who make voluntary contributions or defer taking the benefit until a later age. 


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