Leaving employment or opting out
What will happen to your pension if you leave your job before your pension is due?
- What happens if I leave with two or more years' membership?
If you leave your job with two or more years' membership, including any transferred into your LGPS pension from other schemes, your LGPS pension account will become deferred. See the Past members section to find out more.
- What happens if I leave with less than two years' membership?
If you have less than two years' membership, including any transferred into your LGPS pension from other schemes, then Pensions Services may refund your contributions less a deduction for tax and National Insurance.
If you are paying into another LGPS pension account, your pension from the job you have left will automatically be added onto your ongoing pension. You will not be able to have a refund.
If you are not paying into another LGPS pension account, you can leave the contributions frozen for up to five years while you decide what to do with them. You could:
- wait to see if you join the LGPS again – pension from the job you left would be added to your new pension account
- transfer them to another pension scheme
- have a refund, less a deduction for tax and National Insurance
If you do not make a decision within five years you will have to take a refund.
- What if I do not want to join?
Your employer may have to enrol you in the (LGPS), but if you are thinking of opting out you might want to consider an alternative option which is to elect to move to the 50/50 section of the scheme. The 50/50 section allows you to pay half your normal contributions in return for half your normal pension build up.
After considering the 50/50 option you decide you still want to opt out after you start work you can complete an LGPS opt out form and return it to your payroll department who are responsible for opting you out of the scheme.
- If you have been a member of the LGPS for less than three months, and have not transferred in other pension benefits, then you may receive a refund of your contributions through your payroll.
- If you were a member of the LGPS for three months or more, but less than two years, you can take a refund of your contributions (less any statutory deductions) or transfer out your pension benefits to another scheme.
- If you opt out of the scheme after two years membership then your LGPS benefits will be deferred (frozen) until you either rejoin under the same employment, combine to a new membership, transfer them to another pension provider or retire.
If you joined the scheme before 1 April 2014 and have more than three months membership when you opt out, you may have the option of receiving a deferred (frozen) pension record. We will write to you to confirm this.
- Why have I been automatically opted into the pension scheme?
The government has introduced new laws designed to help people save for their retirement. It requires all employers to enrol their workers into a workplace pension scheme if they are not already in one. This is known as automatic enrolment.
Although you can opt out of the Local Government Pension Scheme (LGPS) at any point after you start work, under automatic enrolment your employer may have to put you back into the pension scheme and start deducting contributions again.
Your employer must tell you if they enrol you into the LGPS. If you become a member but you do not want to be, you will need to opt out by completing another opt out form, even if you have only recently done so.
Usually your employer would put you back into the LGPS in about 3 years time, but because of the way the new laws work, it could be much sooner so it is important to read, and act on if necessary, any information that your employer gives you.
- What are the implications of opting out?
We cannot advise you whether you should remain a member of the Local Government Pension Scheme, nor can your employer force you or opt you out of your Local Government Pension. However, if you choose to opt out of the scheme:
- you will lose the right to employer pension contributions
- you may have a lower income when you retire
- there will be no death in service benefits payable
- What if I change my mind later on?
If you change your mind and you wish to start paying contributions again in the same employment, you should contact your employer who will re-enrol you into the scheme from the next available payroll.