Which type of pension is primarily based on National Insurance contributions?

The State Pension is primarily based on National Insurance contributions because it is designed to provide financial support to individuals in retirement, which is funded through the contributions they make during their working lives. When individuals pay National Insurance, they earn qualifying years that determine their eligibility and the amount they receive from the State Pension. This system ensures that those who contribute more over their working years will receive a higher pension, thereby linking the pension payments directly to the contributions made.

In contrast, a Workplace Pension is typically funded by both employer and employee contributions and varies based on the specific pension scheme set up by the employer. Personal Pensions are arranged by individuals independently and depend on how much they choose to contribute and the performance of their investment. Investment Pensions focus on growing funds through investments rather than being linked to National Insurance contributions. Each of these other types of pensions operates under different principles and structures, distinguishing them from the State Pension system.