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NI Rebates – Frequently Asked Questions

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Are there any advantages to me if I am not likely to retire in the UK?

If you are not planning on being in the UK on your retirement, an NI Rebate will allow you to access your own personal Pension (from Age 60) wherever you are in the world rather than making a claim from the Department for Work and Pensions (DWP) at Age 65. A private pension allows you to choose the type of fund you want to invest in. Transferring pension benefits into an overseas pension fund is normally possible but will depend on the regulations in force at the time of the transfer. You will also be allowed to take up to 25% as a cash lump sum upon retirement.

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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.

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How many years can I claim for?

You can only claim for the current tax year, which runs from April 6th 2008 to April 5th 2009. Department of Works and Pensions (DWP) does not allow anyone to backdate claims beyond the current tax year.

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Do I have to reapply every year?

Once you have applied for a National Insurance Rebate you do not need to reapply again – your rebate will be automatically credited to your Personal Pension plan annually.

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When do I get my NI rebate paid into my personal pension plan?

HM Revenue and Customs (HMRC) only pays out NI Rebates once a year. Usually the rebate payment is made from October for the preceding tax year. i.e. October 2008 for the period 6 April 2007 to 5 April 2008.

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Why can I only redirect my NI Rebate into a pension plan?

The NI Rebate is referred to as “protected rights” and must be used for your retirement. A Personal Pension Plan is an approved vehicle through which your rebate can be invested on your behalf until retirement.

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When can I access my NI Rebate?

Your NI Rebate will be invested until age 60 at which stage you can use the lump sum to purchase a retirement annuity.

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How is my NI Rebate invested?

Your NI Rebate will be invested in Scottish Widows Mixed Pension Series 2

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Who is my NI Rebate invested with?

Your NI Rebate will be invested in one of the leading financial services groups in the UK, and a member of the FTSE100 Index of leading UK companies.

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What if I do not have a permanent NI number?

Due to a change in regulation, HM Revenue and Customs and Scottish Widows do require a permanent NI number to process any 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:

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.

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What benefits will I be losing?

Everyone in employment is automatically required to make National Insurance Contributions. These contributions are taken by the state to be distributed to you through the second state pension scheme on your retirement.

You can opt to give up rights to these funds and have them redirected into your own private pension plan by claiming a National Insurance Rebate. The government sets the rebate at a level to give a reasonable chance that the replacement pension is at least as big as if you had remained in the state scheme. There is no guarantee that you will be better off by opting out of the state scheme. Opting out is an important decision and you need to consider all the implications. This investment is not suitable for everyone and if you want help with your decision you should seek advice from an IFA. If you do not have an adviser, you can find one from IFAP via

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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. In fact it is a good idea to review your decision regularly.

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What charges apply?

Alba Financial Services Ltd receive an initial commission of 4% and a fund based commission of 0.5%. Scottish Widows have an Annual Management charge of 1%.

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What happens to my investment if I die?

If you die before you retire the Managed Fund will use the pension fund you have built up to buy a pension for your husband or wife if, when you die, they are 45 or over or are receiving child benefit. Otherwise the Fund will pay a cash sum and your plan will end. If you have arranged your plan under trust, Scottish Widows will pay the cash sum to the trustees. If not the Fund will decide whom to pay it to based on your nomination request (please see “Your Nomination” on the application form). the Fund consider your circumstances when you died and anyone you’ve previously stated you want the money to go to. If you die after retirement your spouse will receive 50% of your pension.

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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.

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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

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Can I transfer my fund back home?

Transferring pension benefits into a pension fund back home is normally possible but will depend on regulations in force at the time the transfer is being considered. You should seek advice in your home country before making a decision. Even if a transfer is not advisable you will always be able to have the pension (when it becomes payable) paid into a bank account back home.

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I applied for an NI rebate through NI 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.

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What are the special rules for New Zealanders?

When you return to New Zealand you can apply for your Scottish Widows pension to be transferred to a Qualifying Recognised Overseas Pension Scheme (QROPS). Under NZ law you are required to put 60% of the funds into a locked fund and 40% may go into a unlocked fund. You may then cash in the funds in you unlocked fund.