If you stop being a member of the LGPS before you receive retirement benefits, you will have to consider what to do with the rights you have built up.
Refund of contributions
Leaving your job with less than 3 months membership
You may take a refund of your contributions if:
- your total scheme membership is less than 3 months, and
- you have not transferred previous pension rights into the scheme.
Opting out of the scheme with less than 3 months membership
If you opt out with less than 3 months total scheme membership, your contributions will be returned to you by your employer.
A refund of contributions is only the contributions you have paid. Employer contributions are not refunded.
Leaving or opting out of the scheme with more than 3 months but less than 2 years membership
You will be entitled to a refund of contributions or deferred benefits. This depends on several factors. We write to you to let you know your entitlement.
When a refund cannot be claimed
A refund cannot be claimed if:
- a transfer value payment has been accepted from another occupational pension scheme and the length of service for those benefits is 2 years or more
- the aggregate of your LGPS membership and other occupational pension schemes for which a transfer value payment has been accepted is 2 years
- a transfer value payment has been accepted from a scheme which does not permit a refund of contributions to a member, for example, a personal pension scheme
- a transfer value payment has been made to a qualifying recognised overseas pension scheme
- you have a LGPS pension credit benefit relating to your former spouse’s membership of the LGPS
- you already have a deferred benefit or pension in payment from the LGPS in England and Wales (other than a survivor’s pension or pension credit)
- you re-enter pensionable employment with an employer who participates in the LGPS within 1 month and 1 day of leaving the previous employment
- you re-enter pensionable LGPS employment later than 1 month and 1 day after the date of leaving but at that date a refund had not yet been paid
- you pay National Insurance contributions and stop membership in the LGPS after the end of the tax year preceding your State Pension age.
You have to sign a statement that you are eligible to receive the refund.
If you make a false statement, the payment of the refund means that you will no longer be entitled to any other LGPS benefits you may have (other than any LGPS survivor’s benefits being paid to you).
Calculation of a refund
The amount of any refund is reduced by tax at 20%. This amount is payable regardless of your personal tax circumstances and cannot be reclaimed from HMRC.
If your refund includes a period up to 31 March 2016, you paid reduced National Insurance up to that date because you paid into the LGPS. Consequently a deduction is made from your refund to reinstate your National Insurance contributions.
Deferred benefits
If you have more than 2 years membership, you cannot take a refund. Payment of the benefits you have built up in the scheme are deferred. They normally become payable to you from your Normal Pension Age (NPA). The NPA in the LGPS is your State Pension age (SPa), but is at least age 65. Find out what your SPa is
You can take your deferred benefits from an earlier date:
- You choose to take your benefits from age 55 and before NPA. Your benefits are reduced for early payment.
- On the grounds of ill health at any age. Your benefits may be payable on ill health if you become permanently incapable of carrying out the duties of your former post, and the condition is likely to prevent you from obtaining gainful employment before reaching NPA, or for at least 3 years whichever is the sooner. Your former employer may refer you to an Independent Registered Medical Practitioner (IRMP). Your benefits are not reduced for early payment.
Deferred benefits are increased each April in line with inflation. After your benefits are brought into payment, your pension continues to receive cost of living increases each year.
Transfer of pension rights
You can choose to transfer your pension rights to another LGPS employer or any pension provider that is approved by HM Revenue and Customs.
You should let your new employer or pension provider know you are interested in a transfer. They contact us to find out the amount of the transfer value and calculate the benefits that this provides in their scheme. They tell you what benefits the transfer value purchases so you can decide whether to leave your benefits in the Kent Pension Fund or transfer them out.
Never commit yourself to a transfer unless you are satisfied it is the right option to take. Before transferring you may wish to seek independent financial advice in order to make sure it is in your best interests to do so. Find a list of Independent Financial Advisers on the Financial Conduct Authority website.
Concurrent employment
Concurrent employment is if you have:
- two or more jobs where you pay into the LGPS at the same time, and
- you have left one of the contracts whilst still remaining employed in the other(s).
If this applies to you, none of the options are relevant. We automatically aggregate the periods of scheme membership and write to you to confirm the action taken.