Government changes to National Insurance and the State Pension from April 2016
28 Apr 2016
You may have noticed an increase in your National Insurance contributions (NICs) - this is due to the introduction of a new State Pension to replace the current two-tier arrangement
If you are a member of a University pension scheme (UMSS, USS, NHSPS or GMPF), you have been paying contracted-out rate NICs which are lower than the full rate and your pension scheme has provided benefits which at least match, but are usually greater than, those you could have received from the second tier State Pension (S2P).
With the introduction of the new single tier State Pension in April 2016, S2P no longer exists and NICs have increased to 12% of pay for employees under State Pension age on earnings between the primary threshold (£672 per month in 2015/16) and the upper earnings limit (£3,523 per month in 2015/16).
If you reach State Pension age after 5 April 2016 (men born after 6 April 1951 and women born after 1953) and have at least 10 years' qualifying service on your NI record, you can claim the new State Pension. The maximum number of years to count is 35 (compared to 30 under the existing system).
The full State Pension for individuals who reached State Pension age before 6 April 2016 is £115.95 and for those who reach State Pension age after 5 April 2016 is £155.65 per week (both 2016/17 rates).
If you have been a member of a contracted-out pension scheme and qualify for the new State Pension, your State Pension will be reduced to account for the period you have paid contracted-out NICs. Paying NI after April 2016 will build up further qualifying years for the new State Pension.
You can find full information about the changes, why the government has introduced them and what impact they will have on your NICs and eventual State Pension at:
Please note: If you are not a member of a University pension scheme, these changes will not apply to you and you will continue to pay National Insurance at the current rate.