Leaving before retirement
You may leave your job before you want to take your pension. If you’ve paid into the LGPS for two or more years when you leave, you’ll have a deferred pension in the LGPS. If you’ve not paid in for two or more years, you could choose to take a refund of the pension contributions you’ve paid. You may be able to transfer the value of your LGPS pension to another pension scheme after you leave.
Deferred pension
A deferred pension is a pension you’re no longer paying into and hasn’t been taken yet. If you leave your job and have paid into the LGPS for two or more years, we’ll look after your pension for you. Each April we’ll adjust your deferred pension, so it keeps up with the cost of living.
We’ll look after your deferred pension until you:
- choose to take your deferred pension. You can generally take it at any time between 55 and 75. You may be able to take it earlier if you’re too ill to work
- transfer your deferred pension to another pension scheme.
The Government has announced the earliest age that you can take your pension will increase from age 55 to 57 from 6 April 2028.
Leaving the LGPS and paying extra
Additional pension contributions or additional regular contributions
If you’ve bought extra LGPS pension by paying:
- additional pension contributions (APCs) or
- additional regular contributions (ARCs)
you’ll be credited with the extra pension you’ve paid for when you leave. The extra pension will increase the value of your deferred benefits.
If you re-join the LGPS and combine your deferred pension with your new pension, the extra pension will also transfer. You won’t be able to continue with an ARC or APC contract in your new job. You can start a new APC contract though if you’d like to.
If you transfer your LGPS pension to another pension scheme, the extra pension will increase the transfer value.
Added years
If you’re buying extra years in the LGPS, you’ll be credited with the extra membership you’ve paid for when you leave. The extra membership will increase the value of your deferred pension. It will also increase any transfer value paid to a different pension scheme.
If you re-join the LGPS in England or Wales, you can carry on buying added years as long as you:
- re-join the LGPS within a year of leaving
- contact your new Pension Fund about this within three months of re-joining, and
- agree to pay extra contributions to cover any gap between leaving and re-joining the LGPS.
Additional Voluntary Contributions (AVCs)
You may have paid AVCs arranged through the LGPS. These are known as in-house AVCs. Your AVC Fund will continue to be invested until it’s paid out. You can’t pay in-house AVCs after leaving. This means that any life cover you’ve paid for through AVCs will stop.
You could:
- Transfer your AVC to another pension scheme. If you’ve more than one LGPS in-house AVC, you must transfer them all at the same time. You can transfer your AVC and leave your deferred pension account in the LGPS.
- Take your AVC at the same time as you take your deferred LGPS pension.
- Transfer your AVC to the AVC scheme offered by your new Pension Fund if you re-join the LGPS. If you:
- started paying AVCs after 31 March 2014 and
- you combine your deferred pension with your new pension when you re-join the LGPS
you must transfer your AVC.
Leaving without a deferred pension
You won’t get a deferred pension if you haven’t paid into the LGPS for two years. If you don’t qualify for a deferred pension, you’ll usually have three choices:
- You can claim a refund of the pension contributions you’ve paid.
- If you’ve been a member of the LGPS for three months or more, you may be able to move the cash transfer sum (CTS) to another scheme.
- You can delay your decision to take a refund for up to five years or until age 75 if that’s earlier.
Refund of contributions
A refund of contributions will include any:
- pension contributions you’ve paid
- APCs or AVCs you’ve paid, except AVCs paid for life cover
- AVCs paid by your employer under a salary sacrifice scheme, and
- contributions you paid which were included in a transfer payment to the LGPS.
Tax of 20 percent will be taken from the refund.
You can’t take a refund if you:
- re-join the LGPS in England and Wales within a month and a day of leaving the scheme
- re-join the LGPS before you’ve claimed a refund
- are paying into the LGPS in more than one job and you remain an LGPS member in the job that’s continuing.
If you:
- first joined the LGPS before 1 April 2014 and
- leave with between three months and two years membership
you’ll be able to choose a refund or a deferred pension. If you choose a refund, you must claim your refund within six months of the date you left.
