Opting out

What if I opt out of the pension scheme?

The Local Government Pension Scheme (LGPS) is one of the best occupational schemes in the UK. Your employer meets a large part of the cost of providing the excellent range of secure benefits, so it’s an extremely valuable and important part of your employment package. If you’re thinking of opting out of the LGPS, you should carefully consider the benefits you would be giving up – a brief summary of these is shown below. You could also watch the Pensions Made Simple videos here

Why it pays to be a member

  • You get a guaranteed pension for life that goes up every year in line with the cost of living
  • You can give up part of your pension for a tax-free lump sum
  • You get a pension at any age if you become too ill to work*
  • You can retire from age 55 if you’re made redundant or your employer consents*
  • You can retire from age 55 on reduced benefits*
  • If you die there’s a lump-sum death grant of three times your pay – and you can choose who it goes to
  • There’s a pension for your spouse, civil partner or eligible cohabiting partner if you die
  • There are pensions for your (eligible) children if you die
  • You can pay extra to increase your pension benefits
  • You get tax relief on your pension contributions **
  • There are no hidden fees or charges
  • For every £1 you pay into the scheme your employer pays an average of £2
  • Your pension benefits are guaranteed in law and not affected by share prices or the stock market

*a minimum membership requirement applies

** a basic rate taxpayer paying £100 pension contributions would pay £20 more tax every month by opting out

Going 50/50 – a way to pay less for a while instead of opting out

If you need to pay less into the pension scheme for a while you can.

Tell your employer you want to join the 50/50 section of the pension scheme. You’ll pay half your normal contributions, but the downside is that you get half the pension. Think carefully, but it might be right for you for a while.

Opting out

If you opt out of the scheme your entitlement will depend on your membership of the scheme, as follows:

  • If you've been in the scheme for less than three months you’ll be treated as never having been a member and you’ll get a refund of your contributions through your pay.
  • If you've been in the scheme for between three months and two years
    • If you joined the scheme after 31 March 2014 you will be entitled to a refund of contributions from the pension scheme
    • If you joined the scheme before 1 April 2014 you will be awarded deferred benefits in the scheme or you can elect for a refund of contributions within six months of opting out
  • If you've been in the scheme for more than two years, or you have other LGPS benefits, you’ll be awarded deferred benefits in the scheme. These will be payable from your normal pension age (same as your state pension age but with a minimum of age 65) as long as you’ve left your employment. Or you can elect for early payment at a reduced rate from age 55.
  • If you’ve transferred other pension rights into WYPF, LPF or HPF this might affect your entitlement to a refund of contributions.

You might be able to transfer your pension rights to another scheme. Read more about transferring your pension here.

If you decide to opt out of the scheme you can download the form you need here,or phone us on 01274 434999 and we'll send you one.