Leaving the scheme before retirement
If you leave your job with an LGPS employer you'll have the following options:
Been a member of the LGPS for less than two years?
If you've been in the scheme for less than two years, and you haven't transferred in any pension rights from elsewhere, you'll get a refund of contributions. This is as long as you haven't started working for another local government employer within one month and one day of leaving. Your refund will have tax and, if applicable, national insurance deducted.
Please note, the tax deduction isn't income tax and isn't refundable. Unfortunately, we do not have any control over this as HMRC rules state that tax should be taken at a rate of 20% before any refund is paid. This deduction is made irrespective of whether you are a taxpayer. The tax deducted is not reclaimable from the Tax Office even if you do not earn enough to pay tax.
This refund must be paid with five years of leaving the scheme. If the refund is paid after five years from leaving the scheme, it will be subject to an unauthorised payment charge of 40% as required by HMRC.
If you've been a member for more than three months, you also have the option to transfer your pension benefits to another pension scheme. This transfer must take place within five years from when you leave the scheme.
You can delay your decision until you either re-join the LGPS, transfer your benefits to a new pension arrangement, or take a refund of contributions. If you delay your decision, you'll have what's known as a deferred refund pension account. However, this account can only be held in the fund for a maximum of five years or until you reach 75, whichever is earlier. If you haven't transferred your benefits or re-joined the LGPS by that time, a refund of contributions will automatically be paid to you.
If you have two or more jobs where you pay into the LGPS and you leave one (or more) but not all of them, you can't have a refund of your contributions from the job (or jobs) you've left. Instead, we'll transfer your benefits to the job you're continuing in. The amount of membership you'll be granted in the continuing job will be adjusted to reflect any difference in the whole-time rates of pay between the jobs.
If you're due a refund, we'll write to you with a form to fill in for you to choose either a refund of contributions (in which case you'll need to provide your bank details) or a transfer to another scheme. This form isn't sent out until a month and a day after you leave your job to make sure you haven't rejoined the LGPS during this time.
Been a member of the LGPS for more than two years?
Scheme members who leave their job before normal retirement age will get deferred benefits. These benefits are adjusted each year in line with inflation and become due at normal retirement age.
You can transfer your deferred benefits to another pension scheme as long as you do this twelve months before your benefits are due to be paid. Benefits within the LGPS are valuable and we'd advise you to seek independent financial advice before deciding to transfer. If you're considering transferring your benefits, please read our information on Transferring Benefits Out of the LGPS.
If you have deferred benefits, these are worked out after you leave your job, and a statement of these benefits will be sent to you. An annual deferred benefit statement will also be available each year, which can be viewed through ‘My Pension Online.’
Don't forget to tell us about any changes to your address.
Leaving the Scheme FAQs:
What happens if I was paying additional contributions?
If you were paying additional contributions arranged through the LGPS, either Additional Voluntary Contributions (AVC’s) or Additional Regular Contributions (ARC’s), your contributions will stop when you leave.
If you were paying AVCs, the value of your AVC fund will continue to be invested until it is paid out. Your AVC plan is similar to your main scheme benefits in that it can be transferred to another pension arrangement, be drawn at the same time as your main benefits, or deferred until the eve of your 75 birthday at the latest.
With regard to ARC’s, if your employment ends before you complete the purchase, you'll be given the amount of pension purchased. This is worked out as the amount of pension purchased, multiplied by the contributions paid and divided by the total cost.
What happens if my employer makes me redundant or retires me on the grounds of business efficiency?
If you're aged 55 or over with two years service or more, your benefits are due immediately without any early retirement reductions.
If you're under age 55 with two years service or more, your pension benefits will become deferred.
What happens if I've been dismissed on the grounds of gross misconduct?
If you have been dismissed on the grounds of gross misconduct, your former employer may recover or retain the lesser of :
- the amount of the monetary obligation; or
- the value of the time of recovery or retention of all benefits in respect of the former employee with respect to that person’s previous membership (as determined by an actuary, except where the benefits is a refund of contributions).
Your previous employer must give you three months notice and a statement showing the amount to be recovered.
Opting out of the scheme
My pension online
View your pension account and update your personal details.