National Insurance Rebate Questions and Answers
Foreigners and moving away from the UK
- Why should foreigners or UK Nationals intending to retire abroad take note?
If you are not planning on being in the UK on your retirement, the government will impose a freeze on any increases in your retirement pension. By receiving your rebate now you will not be subject to this freeze and can invest the money yourself. - Can I transfer my UK personal pension back home?
Although possible in theory, the fees involved in transferring your pension home often exceed the benefit of doing so. Although Aviva won't charge you to move the pension, the receiving fund or the person advising you will often take a fee . In addition, you do not have to transfer the pension back home to receive the benefits. Aviva will pay it directly into your account in your home country when you retire. - What if I've worked in the UK during the current tax year, but have since left the country?
Unfortunately you have to be living in the UK at the time of your claim. Policy documents can only be mailed to a UK mainland address. - Why should I do this immediately upon arriving in the UK and not just wait until I leave?
The rebate is a year by year process and you cannot claim back previous years. Therefore if you wait until you leave the UK you may lose out on rebates you could have claimed for the years living in the UK. The difference can be quite substantial.
- Can I claim for previous years?
Your claim covers the current tax year (which runs from April 6th) and all years going forward. The Department of Works and Pensions (DWP) does not allow anyone to backdate claims before the current tax year. However, you don't need to re-apply each year going forward. - Do I have to reapply every year?
Once you have applied for a National Insurance Rebate you do not need to reapply again - your NI Rebate will be automatically credited to your stakeholder pension plan annually. - When does the NI Refund get paid to my stakeholder pension plan?
HM Revenue and Customs (HMRC) only pays out National Insurance Refunds once a year. Usually the NI rebate payment is made in October after the preceding tax year. i.e. October 2010 for the period 6 April 2009 to 5 April 2010.
- Why can I only redirect my NI Rebate into a pension plan and not take the cash?
The National Insurance Rebate is referred to as "protected rights" and must be used for your retirement. A stakeholder pension plan is an approved vehicle through which your rebate can be invested on your behalf until retirement. - When can I access my NI Refund?
Your National Insurance Refund will be invested until age 55 at which stage you can use the lump sum to purchase a retirement annuity. - How is my National Insurance Refund invested?
Your National Insurance Rebate will be invested in the default Aviva Balanced Managed Fund. You can change this at any time with Aviva and select from any of their Stakeholder Pension funds. - Who is my National Insurance Refund invested with?
Your National Insurance Rebate will be invested by Aviva. They are one of the leading financial services groups in the world. You can choose which funds to invest in or leave it to them in their Balanced Managed Fund. - How do I get online access to view my NI Rebate investment?
Once your personal stakeholder pension plan has been activated you can register for an individual User ID and PIN to view your investment online by registering on the Aviva website. Details will be provided with your membership pack. You will also be able to update any personal details, such as change of address, online.
- What if I do not have a permanent NI number?
Due to a change in regulation, HM Revenue and Customs and Aviva DO require a permanent NI number to process any NI Rebate application. To obtain a permanent NI number contact the Department for Work and Pensions (DWP). Find out the contact details for the area in which you live or work via the DWP website:
www.jobcentreplus.gov.uk
This will return a list of telephone numbers and contact details of Jobcentres in your area, find the one nearest to your home or office. After booking and attending an appointment, you will be sent a National Insurance numbercard, containing your permanent National Insurance number. - Can I change my mind?
Contracting out of the state scheme is a year by year decision and if you opt out in one year you are not committed to do the same in later years. - What charges apply?
Stakeholder pensions must meet the standards laid down by the government. There will be no charge to the individual to set the pension up. There will also not be a charge on the refund. There is an ongoing investment fund charge of 1%, which is within the stakeholder rules (Aviva will pay a commission to "1st Contact NI Rebates" from this 1% charge). - What happens to my investment if I die?
If you die before you retire and are married, the pension will be used to provide an income for your surviving spouse. If you are single a lump sum death benefit will be paid out to the nominated beneficiary. - What if my employer offers a pension scheme?
Some employers' occupational pension schemes contract-out all scheme members automatically. Other employers' occupational schemes are 'contracted-in' and the scheme pensions are paid on top of any second state pension. You should check with the administrator of your pension scheme before making any decisions. - Where can I get more information on my state pension?
For more information on your state pension visit the Department for Work and Pensions website on www.dwp.gov.uk - Is this a scam or a tax scheme?
No. This isn't a tax scheme at all. Every person is entitled to contract out and receive an NI Refund. It is a personal choice that the department of work and pensions allows you to make. See the link to the following FSA document. http://www.moneymadeclear.fsa.gov.uk/pdfs/contracting_out.pdf - Why do I need to post my application form as well as submitting the online application?
The online application allows Aviva to open your stakeholder pension plan, but a hardcopy signature is legally required to process your National Insurance Rebate claim - I applied for an NI refund in previous tax years, do I need to do anything?
No action is required - you have already opted out. If you need to contact your provider about a change of address, check the confirmation documentation that you were sent to find the name and contact details of your pension provider. - Who are "1st Contact NI Rebates"?
1st Contact NI Rebates is a trading name for 1st Contact Financial Services who are authorised and regulated by the Financial Services Authority (FSA) and offer the facility for individuals to contract out of the Second State Pension (S2P) on a no advice given basis. Should you require advice you should speak to your independent financial adviser. If you have further questions please email us on mailto:nirebates@1stcontact.com call us on 0800 856 0589. If you do not have an adviser, you can find one from IFAP at www.unbiased.co.uk.