The Local Government Pension Scheme (LGPS) allows you to save while you are working in order to enjoy a pension once you retire. It is one of the best occupational pension schemes in the UK.
You might be thinking of opting out of the LGPS for a variety of reasons. Whatever the reason, it's worth taking some time to look at the benefits you could be giving up.
- A brief summary of these is included in the declaration section of this form.
- You can also watch the pensions made simple videos on the LPGS site.
Making your decision
In making your decision, you should also consider that:
- your employer meets a large part of the cost of providing the excellent range of secure benefits offered by the LGPS
- the LGPS is a valuable and important part of your employment package
- in most cases, you will pay more tax if you opt out of the LGPS. A basic rate taxpayer paying pension contributions of £100 a month will pay £20 more tax every month if they opt out
- if you opt out of the LGPS in an employment (other than a concurrent employment) with more than two years' membership, you will be entitled to a deferred pension. If you later re-join the scheme, you will not be able to combine your two periods of membership
What other options are there?
Rather than opting out, you might want to consider moving to the 50/50 section of the scheme. While you are in the 50/50 section, you pay half your normal contributions and build up half your normal pension. This option allows you to remain in the scheme, building up valuable pension benefits. Joining the 50/50 section provides an alternative to opting out of the scheme in times of financial hardship. A 50/50 option form is available from our website.
Costs and benefits
If you want to know more about the costs and benefits of being a member of the LGPS, or of moving to the 50/50 section you can visit the LPGS website which includes a cost and a benefits calculator.
Before you opt out
Whatever your reasons for considering opting out of the scheme:
- you must give this matter careful consideration before making a final decision
- you may wish to take financial advice before deciding to opt out
- if you are opting out of the LGPS due to advice you have received you should ask for this advice in writing
No-one can force you to remain a member of the scheme but, if you elect not to be a member, you should understand the implications both for you and your dependents.
Please note: your employer cannot ask you or force you to opt out. If you are asked or forced to opt out you can tell the Pensions Regulator.
Opting out of the LGPS - what you need to know
- Your employer cannot ask you or force you to opt out.
- If you are asked to opt out, you can tell the Pensions Regulator.
- You cannot opt out of the LGPS before you have started the employment you wish to opt out of, or before your re-enrolment date, if you have opted out previously and are being automatically re-enrolled by your employer. If you sign and date the form before then it will be treated as an invalid opt out.
- You should return the completed opt out form to your employer's payroll section or human resources department.
- If you have another job with another employer, that employer might also put you into the pension scheme, now or in the future. Your initial opt out notice only opts you out of LGPS pension saving in relation to the employer and jobs you have named on this form. A separate opt out notice must be filled out and given to any other employer you work for if you wish to opt out of pension saving with that employer as well. You will need to obtain the relevant opt out form from the Pension Fund of the scheme provided by that employer. This may well be Staffordshire Pension Fund as well.
- If you opt out of the LGPS before completing three months’ membership, you will be treated as never having been a member. You will receive a refund of any contributions deducted from your pay.
- with more than three months’ but less than two years’ membership
- you do not already have a deferred benefit, or pension in payment, from the LGPS in England or Wales
you will normally be able to take a refund of your contributions. There will be a deduction for tax.
- If you opt out of the LGPS with two or more years’ membership, you will be entitled to a deferred pension benefit in the LGPS. You can only take your deferred pension after you have left your employment, and usually from:
- your normal pension age (which is the same as your State Pension age but with a minimum of age 65)
- on a reduced basis from age 55 onwards
Your LGPS pension must be paid to you at age 75 at the latest. Alternatively, you can transfer your deferred benefit to another pension scheme as long as you elect to do this at least one year before your normal pension age.
- If you decide to opt out of membership of the LGPS and subsequently change your mind, you will be able to rejoin the scheme provided you are under age 75 and you remain in an employment that qualifies you for membership of the LGPS. You will need to write to your employer if you want to opt back into the scheme.
- If you stay opted out, your employer will normally automatically put you back into the LGPS approximately three years from the date they have to comply with the automatic enrolment provisions of the Pensions Act 2008. You will be able to opt out of membership of the LGPS again at that time.
- If you change employer, your new employer will normally put you back into pension saving straight away.
Opt out form