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Document Why are there deductions taken from my pension contribution refund?

Two deductions are taken before making a refund of your pension contributions:
  • The first deduction is made to reinstate your rights in the State Second Pension Scheme. Members of our scheme are contracted out of the State Second Pension (formerly the State Earnings Related Pension Scheme (SERPS)) and pay a reduced rate of National Insurance. When we make a refund, we must also pay what is known as a Contributions Equivalent Premium (CEP) to the National Insurance Contributions Office at HM Revenue and Customs (HMRC), to reinstate your rights in the State Second Pension. The first deduction from the refund is your share of this CEP payment. (This deduction only applies to refunds for membership before 06/04/2016, for any refunds after this date only income tax would be deducted).
  • The second deduction is for income tax. The deduction of tax is made regardless of any tax relief due at the time of the refund or allowable when contributions were originally paid. This tax cannot be reclaimed from HMRC. In cases where your income does not exceed the personal allowance and as a result you would not be liable for income tax, we advise to speak with your local Tax Office about whether it would be possible to recover the tax paid on your refund.
If you would like further information about this, please write to the National Insurance Contributions Office:

National Insurance Contributions Office
Services to Pensions Industry (Personal Pensions)
Benton Park View
Newcastle upon Tyne
NE98 1ZZ

Please quote your National Insurance number in your correspondence.
Additional information regarding our refund process can be found on our website.
cep, ni, deductions taken

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