National Insurance was first introduced in 1911 and expanded by the post war government of Clement Atlee in 1946. It was initially intended as an insurance to pay out unemployment and sickness benefits.
Of course times have changed and now NI contributes a whopping 17% of all government receipts!
On the plus side from April 2010 only 30 years’ contributions will be required in order to receive the maximum state pension (age retirement) instead of the previously required 44 years for men and 39 years for women.
As employees we will contribute an additional 1% of our earnings in National Insurance from April 2011 – up from 11% to 12%. The self employed will see their rates rise from 8% to 9%. And employers will also pay an additional 1%, taking their contributions up to 13.8%.