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How are they funded?
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How are they funded?
Benefits are paid for through the tax and National Insurance contributions and paid to both central and local government.
But what is National Insurance?
National Insurance was first introduced in the United Kingdom in 1948.
Everyone over the age of 16 in the United Kingdom must pay National Insurance Contributions until they come to retirement age. These payments are made on a regular basis throughout your working life, and will go towards paying for certain social security benefits, such as Job Seekers Allowance and the State Pension.
If you are employed, these payments will be deducted from your salary automatically. However, if you are self-employed, then it is your responsibility to ensure that these contributions are paid to the government.
There are four main types of National Insurance contributions, known as classes. These are:
Class 1 – are paid by employees and employers. The employee’s portion is called the primary contribution and the employer’s portion is called the secondary contribution.
Class 2 – are paid by the self-employed.
Class 3 – are voluntary contributions which may be paid by someone who is not paying or being credited with Class 1 or Class 2 contributions to help them qualify for certain social security benefits.
Class 4 – are paid for by the self-employed when their profits are above a certain level.
Anyone who pays National Insurance builds up a ‘contribution record’. Your contribution record will determine whether you are entitled to claim certain social security benefits.
So how are my contributions recorded?
Everyone over the age of 16 is given a National Insurance number. This number is used to record a persons’ National Insurance Contributions, and is also used as a reference number for the social security system.
A National Insurance number is specific to an individual, and will not be used by anybody else. This number can be found on your payslip. Everyone who is issued with a National Insurance number will also be issued with a National Insurance number card. This number card is not a form of identification, but can be used to prove your National Insurance number if it is requested.
Your National Insurance number consists of two letters, six numbers and one final letter. It may look similar to this:
AB 123456 C
So how do I get a National Insurance number?
Most people whose parents have claimed Child benefit for them are automatically sent a National Insurance number card just before they reach the age of 16.
If you do not have a National Insurance number, then you can obtain one by making an application to your local Social Security office. The Social Security office will interview you, and will require evidence of your identity before a number will be allocated to you. Suitable forms of evidence are:
- Passport
- Birth Certificate
- Marriage Certificate
However, you may be asked to supply other forms of identification. Please note that photocopies of these documents will not be accepted. If you do not have any of these forms of identification, then you should still attend the interview, as you may be able to prove your identity with the information that you provide.
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