National Insurance |
This is just a particular element of taxation. National Insurance contributions are directed towards healthcare and social security benefits and the amount of the contribution is based on 'band earnings', i.e. earnings between the PCT and the UEL (although changes from April 2003 mean that some contributions are now payable on earnings in excess of the UEL). |
Means Tested |
A means tested benefit is one which is dependent upon how much money you have. The amount of money may be judged by the amount of income you receive or the amount of capital you have or both. |
Pay As You Go (PAYG) |
This is a system of paying for pensions. In terms of the UK State System it just means that todays pensions are paid from taxation collected from todays workforce. Therefore the NI contributions you pay as a worker today do not get collected and used to pay for your own pension they actually get used to pay the current set of pensions to pensioners. |
State Pension Age (SPA) |
The State Pension Age is the age which you can start to receive your state pension. This age is 65 for men and somewhere between age 60 and 65 for women dependent upon date of birth. |
State Pension Age (SPA) |
The State Pension Age is the age which you can start to receive your state pension. This age is 65 for men and somewhere between age 60 and 65 for women dependent upon date of birth. |
Class 1 national insurance |
Class 1 national insurance contributions are payable by all employees with wages or salary in excess of the Primary Contribution Threshold (PCT) which in 2002/2003 is £89 per week. |
Class 2 national insurance |
Class 2 and class 4 national insurance contributions are paid by the self employed. |
Class 3 national insurance |
Class 3 national insurance contributions can be made by anyone not paying either class 1 or class 2 contributions because their income is below the levels at which class 1 or class 2 contributions are payable. |
Lower Earnings Limit (LEL) |
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Working Lifetime |
Working Lifetime for the purposes of calculating the Basic State Pension is defined as the number of years from age 16 to your State Pension Age. |
Qualifying Year |
A Qualifying Year in terms of the calculation of the Basic State Pension means one which would count towards the fraction of the Basic State Pension available. |
Primary Contribution Threshold (PCT) |
The Primary Contribution Threshold is the amount of earnings required before national insurance contributions are payable. It is very similar in terms of its size to the LEL. |
Retail Price Index (RPI) |
This is an index (i.e. like any other financial index such as the FTSE) of the price of goods. Specifically it is a weighted average of all the goods consumed by an average individual in the UK. The ratio of two RPI figures gives an indication of the rise in prices over a given period. |
Contract Out |
Contracting out is a mechanism that permits individuals to give up their right to an Additional State Pension and pay a reduced level of national insurance. The 'saved' national insurance is used to provide pension from either an individual pension or through a company scheme. |
Band Earnings |
Band earnings are all earnings between the Lower Earnings Limit (LEL) and the Upper Earnings Limit (UEL). |