National Insurance and State Pensions

6. Entitlements

Paying NICs entitles individuals to certain benefits. As the National Insurance fund is currently in deficit, you are unlikely to receive back what you pay in.

6.1 A full basic state pension of £90.70 a week if you have paid NICs for about 90 per cent of your working life.

• The state pension is reduced if you have made fewer contributions.
• Employees can ask the Benefits Agency for a forecast of their pension.You will have to complete a BR19 form.
• The pension age will be equalised at 65 for both men and women from 2020.

6.2 You are entitled to the State Second Pension if you have paid standard-rate Class 1 NICs between the upper and lower earning limits in any tax year since April 1978.

• The pension will depend on the amount of contributions made.
• The maximum is currently 25 per cent of earnings between the upper and lower earnings limit, but this will reduce to 20 per cent from 2009.

6.3 You are entitled to statutory sick pay (SSP) if you earn £90 or more per week. SSP is currently £75.40 a week.

• Employers can opt out of the scheme as long as they agree to pay (at present) £75.40 a week or more to employees.
• Many employers maintain full pay.

6.4 You are entitled to statutory maternity pay (SMP) if you meet certain conditions.

• You need to have been continuously employed for 26 weeks and to have paid Class 1 contributions on earnings of at least £90 a week for the eight weeks up to the 15th week before the baby is due.
• You receive 90 per cent of your average weekly earnings for the first six weeks.
• You receive £117.18 a week (or 90 per cent of your average earnings if lower) for the remaining 33 weeks of the ordinary maternity leave period. Many employers pay their employees more than this statutory minimum.
• Employers can recover 92 per cent of the SMP paid to their employees.
• Employers who do not pay more than £40,000 of Class 1 NICs in the tax year get Small Employer's Relief. This recovers 100 per cent of SMP and an additional 4.5 per cent as compensation for the NICs paid.