Refund of Contributions
Refund of Contributions
Contribution Refund Content
What is a Refund?
A refund is a payment to reimburse an employee or employer or in some cases, both parties for overpaid contributions.
Types of Refunds
An Overlapping refund occurs when an employee is paid sickness, maternity or employment injury benefits for a National Insurance week, which runs from Monday to Saturday and the employer has submitted the contributions on their behalf. The refund is payable both the employee and the employer.
A refund for Over Pensionable Age happens when a person reaches pensionable age and their contributions are submitted at the incorrect rate. The rate payable is 0.60% for employees and 1.50% for employers (as at 1st January 2019). However, these rates are not fixed and can be changed overtime. Both the employer and the employee will be refunded.
An Excess refund is when an employee works for more than one employer and has paid contributions on earnings that exceed the maximum earnings ceiling, which are subject to change. The maximum earnings ceiling is $1,126 weekly and $4,880 monthly (as of 1st January 2020). Only the employee gets a refund.
A Temporary-Permanent (T-P) refund occurs when a temporary (T) government employee has been appointed as a permanent (P) employee, but the employer reports their contributions at the incorrect rate of T. The employee is paid refunds from the month after the effective date of appointment to the point where earnings change to P. The refunds request application letter, along with the appointment letter and confirmation letter / medical confirmation form must be submitted two (2) years from the end of the contribution year in which the confirmation was received. E.g., if the confirmation letter was received in in May 2015, the latest date for the submission would be at the end of 2017.
An Overdrawn refund takes place when the employer overpays the employee. As a result, the employer pays too much contributions. To facilitate the process, amended schedules to show the corrected salary must be submitted or changes can be made via the NIS Online Portal. In addition, a letter should be sent to the Director, National Insurance Office advising of the change.
Employer Error: This type of refund arises when the employers report incorrect earnings and pay incorrect contributions on behalf of their employees.
Refunds to Employers Only
A Refund of contributions is payable to employers who have overpaid contributions. Overpayment can result, for example:
- When contributions have been paid at a rate other than that at which they should have been.
- Where contributions have been paid for an insured person during the period when that person is receiving benefits. In this case, both the employer and employee are refunded but the person must have received benefits for a full week from Monday to Saturday to qualify for a refund.
- When a contribution has been paid under the erroneous belief that it was payable, an application for a refund may be made to the National Insurance Office. An application for a refund must be made within twelve months from the end of the contribution year for which the contributions are paid.
Working for More Than One Employer
In cases where an employee works for more than one employer, each employer must pay contributions for the employee. If, in such cases, the total of the employee’s share of the contributions for a pay period exceeds the maximum employee contribution payable for the period, the employee may apply to the National Insurance Office for a refund of the excess contribution paid. There will be no refund of the employers’ share of the contribution in this instance.
Deadline for the Submission of Refunds
Refund applications with the exception of the Excess refund should be submitted within two years from the end of the contribution year during which the contributions were paid. The Excess refund must be submitted one year from the end of the contribution year during which the contribution was made. A contribution year runs from January to December.
The Refunds Request Application Letter
Applications for a refund of contributions should be made in writing to the Director, National Insurance Office and should contain the following information:-
- Name and address of the insured person
- National insurance number of the insured person
- Name and address of the employer
- Registration number of the employer
- The period for which the refund is being requested
- Reason for the refund