Leaving without deferred benefits
You will not qualify for deferred benefits if you do not meet the two year vesting period. If you do not qualify for deferred benefits, you will generally have three options:
- You can claim a refund of the pension contributions you have paid.
- If you have been a member of the LGPS for more than three months, you may be able to transfer the cash value of the deferred refund to another pension arrangement. You will generally have to complete a transfer within a limited time after leaving. See the section on Transferring your pension to find out what you need to know about pension transfers.
- You can delay your decision. You should bear in mind any time limit for completing a transfer out. You can delay your decision to take a refund for up to five years or until age 75 if that is earlier.
Refund of contributions
A refund of contributions will include:
- any pension contributions you have paid
- any Additional Pension Contributions or Additional Voluntary Contributions (AVCs) you have paid, except AVCs paid for life cover
- any AVCs paid by your employer under a salary sacrifice scheme, and
- any contributions you paid which were included in a transfer payment received by the LGPS.
Tax of 20 percent will be taken from the refund. The refund may also be adjusted if you paid National Insurance as a Scheme member before 6 April 2016. You paid National Insurance at a lower rate as an LGPS member before 6 April 2016. This adjustment will buy you back into the State Second Pension (S2P) for the period before that date.
You do not have to take your refund immediately. You can delay payment for up to five years after leaving the LGPS, or until age 75 if this is sooner. Your pension fund must pay the refund at that point.
If you are paid the refund more than a year after you left the Scheme, your pension fund will add interest. The interest rate is 1 percent above base rate on a daily basis, compounded with three monthly rests, from the date you left the Scheme to the date the refund is paid.
You cannot take a refund if:
- you re-join the LGPS in England and Wales within a month and a day of leaving the Scheme
- you re-join the LGPS before you have claimed a refund
- you are paying into the LGPS in more than one job and you remain an LGPS member in the job that is continuing. See the FAQs for more information about what happens if you are paying into the LGPS in more than one job.
You will have an additional option if you first joined the LGPS before 1 April 2014 and you leave with between three months and two years membership. You will be able to to choose a refund or a deferred benefit. If you choose a refund, you must claim your refund within six months of leaving.