§ In line with the requirements of the Social Security Pensions Act 1975, the lower earnings limit for class 1 contributions is to be increased to £23 a week, just below the new basic retirement pension, and the upper earnings limit is to be raised to £165 a week, which is about seven times that pension. These new limits replace the present limits of £19.50 and £135 a week respectively. The contributions reductions for contracting out are unchanged.
§ The effect of these changes and of the changed rates is that for the employee no contribution will be payable if his earnings are below £23 a week. Between earnings of £23 and £135 increases will range from 4p to 36p a week where the employment is not contracted out. For those earning more than £135 a week the increases will be greater, rising to a maximum at the new upper earnings limit—£165—of £2.37 a week. For those employees contracted out the equivalent increases will be from 13p a week to 43p a week—at earnings of £135—progressing to a maximum of £1.69 a week.
§ For employers the increases in contributions where the employment is not contracted out will be from 3p a week to 30p a week—at earnings of £135; over that level employers' liability will rise to a maximum of £3.33 a week. The comparable figures for employers' contributions in respect of contracted out employees will be from 19p a week to 45p a week—at earnings of £135—rising to a maximum of £2.14. These figures take account of the proposed reduction in the employment protection element of the employers' contribution. They exclude the national insurance surcharge.