NP45 - A guide to Bereavement Benefits

Your National Insurance contributions

Social security benefits may be contributory or non-contributory, and certain benefits are income-related. To qualify for a contributory benefit or pension you will usually have to meet a set of National Insurance (NI) contribution conditions. Incapacity Benefit and State Pension are examples. Non-contributory benefits include Severe Disablement Allowance, Incapacity Benefit (Y) (IB(Y)) and Carers Allowance. To qualify for income-related benefits you have to belong to the group of people whom the benefit was intended to help. Income Support (for people on a low income or none) and Housing Benefit are examples. There are no contribution or income-related conditions for Child Benefit which is for people with dependent children.

In general, if you work for an employer and earn more than the lower earnings limit or if you are self-employed, you have to pay NI contributions until you reach pensionable age. After pensionable age you do not have to pay contributions.

Classes of NI contributions

There are 6 classes of NI contributions. Only 3 count towards benefit:

Class 1 contributions

You pay Class 1 contributions if you work for an employer and earn more than the primary threshold (PT), sometimes called the employee’s earnings threshold. The more you earn above the PT the more you pay but you will pay a different rate of Class 1 contributions on any earnings you receive above the upper earnings limit (UEL). If you earn at or below the PT but above the lower earnings limit (LEL) you will not pay Class 1 contributions but you will be treated as having paid them to protect your National Insurance record. Your employer also pays Class 1 contributions but he will pay the same rate on all of your earnings above the PT. [Legislation (110)]

For more information about the lower earnings limit (LEL), the upper earnings limit (UEL) and employee’s earnings threshold.

For the current NI rates and limits, see leaflet GL23 Social security benefit rates.

For more detailed information, see leaflet CA01 National Insurance contributions for employees.

Class 2 contributions

You pay Class 2 contributions if you are self-employed. You pay at a flat rate. But if you expect your net earnings to be less than a lower limit you can apply for small earnings exception so that you don’t have to pay. You can pay Class 2 contributions by direct debit or by quarterly bill. Latest rates and limits are given in leaflet GL23 Social security benefit rates. [Legislation (111)]

For more information see leaflets CWL2 National Insurance for self employed people – Class 2 and 4, CA02 National Insurance contributions for self-employed people with small earnings and CA04 Class 2 and Class 3 National Insurance contributions – Direct Debit – the easier way to pay.

Class 3 contributions

You may be able to pay Class 3 contributions voluntarily to keep up your right to state Retirement Pension when you reach pensionable age. You might wish to pay these if you do not have to pay Class 1 or Class 2 contributions because: [Legislation (112)]

• you are not working
• or your earnings as an employee are less than the lower earnings limit
• or you are exempted from payment of Class 2 contributions as a self-employed person. But it could be to your advantage to pay Class 2 contributions rather than apply for exemption or to pay Class 2 contributions voluntarily
• or your contribution record is not good enough to entitle you to a Retirement Pension.

You pay Class 3 contributions at a flat rate and can pay by direct debit or by quarterly bill. Latest rates are given in leaflet GL23 Social security benefit rates.

You cannot pay Class 3 contributions for any tax year when you had reduced-rate liability for the whole year (see ‘Reduced-rate liability’).

You may wish to consider paying Class 3 contributions to help you to qualify for or improve your entitlement to some benefits. Class 3 contributions may be paid towards your late spouse or civil partner's contribution record, if this will count towards bereavement benefits. If your bereavement benefit is affected by the amount of contributions paid by your late spouse or civil partner's, you should contact the office which dealt with your claim. Further information can be found in leaflet CA09 National Insurance contributions for widows and widowers.

For more details see leaflets CA13 National Insurance contributions for women with reduced elections, CA08 Voluntary National Insurance contributions and CA04 Class 2 and Class 3 National Insurance contributions – Direct Debit – the easier way to pay.

Reduced-rate liability

If, when your husband died, you had the right to pay married women’s reduced-rate Class 1 contributions when working for an employer, or no contributions when self-employed, this will go on for as long as you continue to receive Widowed Parent’s Allowance, Widowed Mother’s Allowance or Widow’s Pension. [Legislation (113)]

From April 2000, there were structural changes to National Insurance contributions. This meant that women entitled to reduced-rate liability could be better off if they gave up that right. They could start to build up entitlement to contributory benefits at no extra cost.

For more information see leaflet CA13 National Insurance contributions for women with reduced elections. Or visit the HM Revenue & Customs website at http://www.hmrc.gov.uk/.

You can change from reduced-rate to full-rate liability at any time by completing form CF9A in leaflet CA09 National Insurance contributions for widows or widowers and sending it to HM Revenue & Customs, National Insurance Contributions Office, Contributor Caseworker, Benton Park View, Newcastle upon Tyne NE98 1ZZ. You cannot change back to reduced-rate liability once you have chosen to pay at full rate, unless you tell HM Revenue and Customs, in writing, before the date from which you wish to cancel reduced-rate liability.

For more details see leaflet CA09 National Insurance contributions for widows or widowers.

Home Responsibilities Protection

If you are precluded from regular employment because you are looking after children or a sick or disabled person, you may be able to get Home Responsibilities Protection (HRP). It helps protect your rights to basic Retirement Pension if you are not paying Class 1 or Class 2 contributions. From 6 April 2002 it may also help to build up additional pension through State Second Pension. You cannot get HRP if you have kept the right to pay a reduced-rate contribution as a married woman or widow. [Legislation (114)]

If, however, you are getting Carer’s Allowance (CA) – formerly Invalid Care Allowance – you will also get a National Insurance credit for each week you get CA and may not have to apply for HRP. From 6 April 2002 it may also help to build up additional pension through State Second Pension. Credits are not awarded if you have kept the right to pay a reduced-rate contribution as a married woman or widow.

A qualifying year of contributions or credits may sometimes give a higher rate of Basic Pension than a year of HRP.

For more information on this and the qualifying conditions for Home Responsibilities Protection see leaflet CF411 Home Responsibilities Protection if you are looking after someone at home, and leaflet PM9 State Pensions for Carers and Parents – Your Guide available only from a Jobcentre Plus office, Jobcentre or social security office.

Further information on National Insurance

If you want to know more, see leaflet CA09 National Insurance contributions for widows or widowers.

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