You have the right to opt out of the LGPS if you decide you do not wish to be a member. What happens if you opt out depends on how long you have been a member of the Scheme. You should think carefully before opting out. Opting out may reduce your income in later life. You may wish to get help from an independent financial adviser.Back to top
Your opt out decision
If you are thinking about opting out of the LGPS, you might want to consider moving to the 50/50 section of the Scheme. In the 50/50 section you pay half the normal contributions to build up pension at half the normal rate. You retain full life cover and ill health cover in the 50/50 section. See the section on Paying less for more information about the 50/50 section.
If you have decided that the 50/50 section is not for you, you can opt out of the LGPS. You cannot opt out before the first day that you are a member. This will usually be the first day of your employment, but it may be the date your employer must bring you into the LGPS under Automatic enrolment rules.
You can opt out by giving your employer notice in writing. Contact your pension fund to get an opt out form.
Your employer cannot give you an opt out form. If your employer puts pressure on you to opt out of the pension scheme, you should contact the Pensions Regulator.Back to top
Opting out before three months
What happens after you opt out depends on how long you have been a member of the LGPS.
If you opt out of the LGPS before you complete three months’ membership, you will be treated as never having been a member. Your employer will refund any contributions that you have paid through your pay.
Any contributions you have paid will be refunded if you opt out after less than three months, even if you have a deferred LGPS pension or an LGPS pension is being paid to you.Back to top
Opting out with less than two years’ membership
If you have been a member for three months or more, but you have not met the two year vesting period, you will have different options:
- You can take a refund of the contributions you have paid. 20% tax will be taken from your contribution refund.
- You can transfer your pension to another qualifying pension scheme. You may have a limited time in which you can elect to transfer. Contact your pension fund to find out about any time limits that will apply.
If you were in the Scheme before 1 April 2015, transferred benefits in from a different pension scheme before then, left after 31 March 2015 and do not meet the two year vesting period, you can choose to have deferred benefits in the LGPS or take a refund. You choose by giving your pension fund notice in writing within six months of leaving. If you do not make a choice within that period, your LGPS fund will give you deferred benefits.Back to top
Opting out after more than two years
If you opt out after meeting the two year vesting period, you will have deferred benefits in the LGPS. You will generally have the same options as anyone who leaves their job before retirement. But there is one main difference. If you opt out, you cannot take your deferred pension until you have left your job, unless you reach age 75.
For more information about deferred benefits, see the section on Leaving before retirement.Back to top
Re-joining the LGPS
If you opt out, your employer is required to re-enrol you in the LGPS approximately every three years on a set re-enrolment date. They will only re-enrol you if you are an eligible jobholder.
If you opt out of the LGPS, you will almost always be able to opt back in again. You can opt in if you are still eligible to join the Scheme and you are under age 75. You will generally be able to opt in by telling your employer in writing. Contact your pension fund to find out if they have a form for you to complete to opt in to the LGPS.Back to top