The Department for Work and Pensions has published an analysis of the number of people who have paid National Insurance contributions between 6th April 1978 and 5th April 2004. In summary, the trends are as follows:

• The highest number of people making NI contributions was 28.12 million in 2002/03.
  
  
• The number of people qualifying for state pension was over 32.5 million in 2002/03, the difference being the inclusion of people qualifying by reason of credits and Home Responsibility Protection (HRP).
  
  
• The number of women entitled to pay reduced rate NICs fell from 3.23 million in 1978/79 to just 71,000 by 2003/04. As no new reduced rate authorities were granted after April 1978, the fall is attributable to women reaching State Pension age or transferring to full rate contributions.
  
  
• In 1978/79, 31% of women accruing qualifying years for the basic state pension did so through being awarded Home Responsibilities Protection (HRP), whereas 54% of women accrued qualifying years through paying Class 1 NICs. By 2003/04 the number benefiting through HRP had reduced to 15%, with 66% accruing by payment of Class 1 NICs.

A further analysis looks at the number of people in contracted-out pension scheme memberships and State Earnings Related Pension Scheme (SERPS) and State Second Pension (S2P) memberships since people were first permitted to contract-out in 1978/79.

• In 1978/79, the number of people with some form of additional pension cover was around 18 million, leaving approximately 6.5 million employees without any additional cover. By 2003/04, increases in the number contracting out and in those accruing cover under the State Second Pension had increased the number of people with some form of cover to nearly 26 million, slightly less than the estimated number of employees in employment.
  
  
• The increase in the numbers with second tier cover in 2002/03 was largely due to the new entitlement conditions for S2P, which allowed a further 4 million people to gain cover from the new rules for carers and long term sick or disabled. A further 6.1 million low and moderate earners also began to accrue some extra second tier entitlement, bringing the total number of new people potentially accruing extra pension benefits under the new State Second Pension to more than 10.1 million in 2002/03. In 2003/04 the number accruing S2P was 20.7 million.
  
  
• In 1978/79, 47% of people gained cover through SERPS, 32% through private sector schemes and a further 20% through public sector schemes. By 2003/04, more contracting-out options and a reduction in the number of employers offering salary related schemes changed this profile, so that over 57% of members are covered principally through S2P, 18% through public sector schemes, 11% through an Appropriate Personal Pension or Stakeholder Pension, 11% through private sector schemes and around 2% through money purchase occupational schemes.
  
  
• In April 2001 people were given the option to use a Stakeholder Pension to contract out. By 2003/04, the total number of stakeholder pension scheme members contracted-out was 114,000.

...back to 2 February 2006


Source:
Contributions and Qualifying Years 1978/79 to 2003/04
Second Tier Pension Provision 1978/79 to 2003/04

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