Money Grouse: How a public-spirited gesture backfired

MICHAEL FRASER (not his real name) thought he was being public-spirited when he declined to sign on for unemployment benefit after being made redundant from his job as a finance director four years ago.

He got a new job after 17 months but two and a half years later he was made redundant again. He discovered he was not entitled to unemployment benefit this time because of the break in his National Insurance contribution record during his previous period out of the workforce.

'It seems that neither my recent period of two and a half years' contributions, nor my previous unbroken 20-year record count for anything in these circumstances,' he says. 'I have become a victim of the minutiae of the regulations, as a result of trying to exercise a social conscience in not claiming the benefit entitlement of which I had no need.'

A spokesman for the Department of Social Security confirmed that Mr Fraser appeared to have fallen foul of rules on unemployment benefit. Entitlement to benefit depended on NI contributions in the two tax years preceding the date of redundancy, the spokesman said.

'You should sign on as unemployed on the first working day after leaving your old job. As long as you do this, you will receive credits for National Insurance contributions.'

People should, therefore, sign on even if they did not want to collect the unemployment benefit.

It is possible to make voluntary NI contributions after a period when no contributions have been made, but these can only count towards a pension, not other benefits.

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