How is a refund of contributions worked out?
If you leave the scheme before meeting the 2 year vesting period you can choose a refund of contributions. A refund of contributions will include:
- any pension contributions you have paid, and
- any additional pension contributions or AVCs you have paid (other than AVCs paid for additional life cover), and
- any contributions you paid which were included in a transfer payment which the LGPS received from another pension arrangement
A refund of contributions will have a deduction for tax and also the cost, if any, of buying you back into the State Second Pension (S2P) in respect of membership up to 5 April 2016. If a refund is not paid within 1 year of you leaving the scheme then interest is payable. The rate of interest is 1% above base rate on a day to day basis from the date you left the scheme to the day the refund is paid (compounded with three monthly rests).
Your refund of contributions must be paid within 5 years of your leaving the scheme (or age 75 if earlier). At that point a refund of contributions is automatically paid to you.