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National Insurance Rebate

What is an NI Rebate?

Very few people are aware that the government gives us a choice as to where some of our NI contributions should go. Anyone who is resident in the UK and who pays NI can opt to rebate some of their contributions.

Why Claim your NI Rebate?

Should foreigners residing in the UK decide to return home, their NI contributions will remain in the state pension where they will not be able to touch their pension until the age of 68. Even worse, this benefit is frozen and doesn't accumulate growth with inflation i.e. over time the real value is lost.

For individuals planning to leave the UK in the future, transferring their NI contributions into their personal pensions will present far greater value. This will allow the invested money to grow as well as create increased flexibility to transfer the funds to different countries, and on the whole increase future wealth.

You only opt out of the government scheme once, so as soon as this has been arranged, all future contributions will continue to go into your private stakeholder fund. Those who are permanent, temporary, or operate through a Limited Company (if your salary portion is higher than the personal allowance) will benefit from this.

You can only redirect your contributions from the current tax year (2010/11) if your application is processed before the 5th April 2011.

What are the Benefits?

As a foreigner you are more likely to receive better benefits than leaving the money with the government. These include:
  • You have the ability to move the pension with you to other countries when you leave the UK.
  • You (and not the government) have complete control of your funds.
  • You are not impacted by any future governments changing the rules.
  • You can retire earlier (age 55 rather than age 65).
  • You can take 25% as a cash lump sum when you retire.
  • If you die before your retirement age your heirs will receive your remaining fund.
  • You can choose how you would like your funds invested.
  • You are still eligible for the Basic State Pension; it is only the Second State Pension you are opting out of.
You will also continue to be opted in for the State Second Pension for prior years and not lose those benefits.

Claiming an NI Rebate is very straightforward and will only take a few minutes to complete. Click here.