If you change jobs, the pension you have built up can remain in the Scheme or be transferred to another pension scheme. From 1 April 2015 you may need to obtain independent, impartial financial advice before being able to transfer your LGPS pension out to certain types of pension scheme. We will let you know if this is the case. You can find details on independent financial advice on the useful links page
If you ever return to local government employment (excluding teaching) you re-join the Scheme or the LGPS elsewhere.
Can I opt out of the Scheme?
Although membership of the Scheme is automatic in many cases, it isn't compulsory, even if you join under automatic-enrolment. You can cancel your membership at any time. This is known as 'opting-out'.
You should be aware that in certain circumstances your employer may be obliged by law to re-enrol you into the LGPS at a later date, even though you have previously opted not to be in the Scheme.
Apart from the main retirement benefits, you will lose out on extras, such as ill health cover. You may wish to get independent financial advice before opting-out. You can find details on independent financial advice on the useful links page.
Leaving before you retire
If you leave the Scheme before you retire, you can choose what to do with your pension in the Pension Scheme.
The choices you have depend on how long you have been a member.
On leaving, you have two options
You can choose to keep your pension in the Scheme - this is known as deferred pension and will be reviewed every year in line with the cost of living.
You may be able to transfer your pension to a new pension arrangement, although in some circumstances you may need to receive impartial, independent financial advice before you can do so.
If you are a Scheme member for more than one job, and leave one of them, you can choose between deferred benefits (depending on how long you've been a member) or you can transfer the membership to count in the other job.
Transferring your benefits out
You can transfer your pension to any other pension scheme as long as the new scheme is one approved by HMRC and willing to accept the transfer.
If you want to transfer your pension you should tell your new scheme that you hold benefits within the Pension Scheme.
- They will approach us for a transfer value and let you know what the benefits are worth in their scheme.
- Your new employer or pension scheme will then work with you regarding whether or not you wish to go ahead with the transfer.
- If you decide that you want to go ahead with the transfer they will ask us to pay the transfer payment over to your new pension scheme.
Deciding to transfer your benefits is an important decision. You may wish to take independent financial advice, although from 1 April 2015 you may need to obtain independent, impartial financial advice before being able to transfer your LGPS pension out to certain types of pension scheme. We will let you know if this was the case. You can find details on independent financial advice on the useful links page
You must have less than 2 years Scheme membership (and have no other LGPS benefits in Scotland) to get a refund of your contributions and not have transferred in benefits from another pension scheme.
Only your own contributions are refundable, those paid by your employer are not. There will be deductions to account for tax relief and, if applicable, National Insurance.
Keeping your pension in the Pension Scheme
Your pension is worked out when you leave the Scheme, based on the amount of membership you have built up and your pay during your membership, in the same way as for retirement.
It is then held in the Scheme where it is reviewed each year in line with the cost of living, until put into payment.
If you wish to cancel your membership you're free to opt out from your next pay period.
Think about a temporary reduction to your contributions
If you are thinking of opting out because of the cost you can stay in the Fund but pay less.
There is an option called 50/50 that allows you to pay half of the contribution but only build up half the pension. If you have more than one job you can make this choice in one, all or some of them.
Your survivor's benefits are unaffected.
Your employer will need you to make your choice in writing.
This is only meant to be a short term solution and you will have to again pay the full contribution rate when your employer has to re-enrol you every three years, via automatic enrolment legislation. If you are away from work without pay due to sickness you will have to pay the full rate when your pay recommences.
How do I opt out?
If you want to opt out you can do so at any time. You will need to complete the opt-out form (see Related Documents in the "Helpful Information" section) and return this immediately to your employer so that they can carry out the necessary actions to remove you from the Scheme. The choices you have depend on how long you have been a member. You can find details in the above 'Leaving before you retire' section. You can ask your employer to cancel your membership any time after your request. Otherwise, they will just cancel it from the start of the next pay period. Please note, however, that any opt out form that has been completed before you commence your employment cannot be accepted and you will have to make a further election on or after the date your employment commences if you do wish to opt out.
If you have joined the LGPS on the commencement of your employment or as a result of being automatically-enrolled or re-enrolled then you must confirm your wishes to your employer no later than three months from joining the Scheme in order that your contributions can be returned and you can be treated as never having been a member.
Opting out of the LGPS is a big decision as you will be giving up a guaranteed income for when you retire as well as other benefits such as valuable life cover while you are working. If you choose to opt out you will also be giving up extra savings that your employer and the Government provide to help you save. If you are thinking of opting out we recommend that you speak to an Independent Financial Adviser (IFA) before making a decision. You can find details on independent financial advice on the useful links page.