National Insurance. In 1911 the Asquith government, reflecting changes in public attitudes towards the causes and cures for poverty, passed the National Insurance Act—Health and Unemployment, which introduced sickness and unemployment benefits to be paid for out of employers' and employees' contributions. This was the beginning of the contributory, non-means-tested half of the British social security system; in 1925 state insurance for contributory old-age pensions was added.

The 1946 National Insurance Act, based on the principles of the Beveridge Report (1942), established a comprehensive national social insurance scheme: employers, employees, and the self-employed were to make contributions, which would make the insured and their families eligible to receive categorical benefits when they suffered the contingencies insured against—unemployment, sickness and invalidity, widowhood and old age. Though the original intention was to create a fund of income-producing assets, the system was unfunded, based on the pay-as-you-go principle, with current contributors paying for the benefits of current recipients.

Margaret Wilkinson

national insurance (NI) In Britain, state insurance scheme, founded by Lloyd George in 1911. More comprehensive proposals by Lord Beveridge formed the basis of the National Insurance Act (1946). NI provides sickness, maternity, unemployment and child benefits as well as old-age pensions. It also contributes to the cost of the National Health Service (NHS). The scheme is funded by compulsory contributions from employers and employees and is administered by the Department of Social Security.