Pension Opt Out Form LGPS Benefits Other things to consider if you

Pension Opt Out Form
Membership of the Local Government Pension Scheme (LGPS) is automatic for the majority of members, but it
is not compulsory that you remain in the Scheme. You can choose to opt out of the LGPS at any time.
However, before taking this important decision you should consider the benefits that you will be giving up. The
LGPS is one of the best occupational pension schemes available in England and Wales and offers its members
a wide variety of benefits.
LGPS Benefits
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guaranteed index linked pension at retirement based on your career average earnings
option to convert some pension to tax free cash on retirement
generous death in service cover – a death grant of 3 times your pay
pensions for eligible dependents on your death, based on your career average earnings enhanced to NPA
(Normal Pension Age)
your employer also contributes on your behalf (as much as 2 or 3 times the amount you pay)
automatic early release of benefits from age 55 if you are retired on the grounds of redundancy or
efficiency of the service
option to take flexible retirement from age 55 (with your employers consent)
ill-health retirement benefits payable from any age
you can pay more to increase your benefits
Scheme contributions attract tax relief and National Insurance savings
There are no administration charges
benefits are guaranteed in law and not dependent on investments
Other things to consider if you opt out
If you opt out with less than 2 years membership, have not transferred in service, and have no other LGPS
benefits you will receive a refund of contributions less deductions of tax and, if applicable, National Insurance
contributions. You will forgo all of the benefits of being a member of the LGPS.
If you opt out with 2 years membership or more (or have transferred in service), you will be awarded deferred
pension benefits and the following will apply:
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your benefits will be based on the pension built up in your pension account
death grant will be 5 times annual pension (instead of 3 times actual pay for active Scheme members)
dependents pensions will be based on accrued pension only (no enhancement to NPA)
you will lose the future employer contributions (your employer may not be allowed to contribute to another
scheme instead of the LGPS)
if you are made redundant/retired on efficiency of the service your benefits will not be available until you are
age 55, and reductions for early payment may apply
if you rejoin the Scheme it will not be possible to pay back contributions for any period of opting out. You
will be able to buy additional pension (APC’s) but this is more expensive.
This section answers some of the questions you might have about opting out.
When can I elect to leave the LGPS?
You can opt out at any time. On the form you will be asked to state the date that you wish to opt-out of the Scheme
(opt out date). If this date is earlier than the date the form is received by your employer or if you do not state a date
you will cease to be a member at the end of the payment period during which the notice is given.
N.B. If you do not enter a valid opt out date, your employer will cease your membership at the end of the payment
period during which the notice is given and if this causes your membership to exceed 2 years you will not be
entitled to a refund and will be awarded deferred benefits.
Can I pay less contributions?
Yes. You can move to the 50/50 section of the LGPS. You would pay half contributions to receive half the pension,
with the benefit that the ill-health and death in service cover is the same as the main scheme.
I have less than 2 years membership. Will I have my contributions refunded?
Yes. However, if you have been credited with a pension service credit following a transfer of pension rights as at
your date of opting-out or have no other LGPS benefits, you will be unable to receive a refund of contributions.
Instead you will be awarded deferred benefits.
Who pays my refund?
Your employer will refund all contributions paid from your date of joining the scheme and, if applicable, will make
adjustments for National Insurance and tax. Therefore you will not receive back the full amount you have paid in.
How much higher will my “take home” pay be if I opt out?
If you do not pay tax or National Insurance, opting out will mean that your “take home” pay will increase by the same
amount as your pension contribution.
Otherwise, as you receive tax relief on your pension contributions and/or pay a lower rate of National Insurance
contributions, opting out will mean that although your “take home” pay will be higher, the increase will be less than
the pension contribution amount shown on your payslip.
I have over 2 years membership. Can I have my contributions refunded?
No. You will be entitled to deferred benefits. When we have calculated the amount of pension that you have built up
in the Scheme we will send you a statement. You can choose to leave the deferred pension in the Scheme until
normal pension age (NPA) or the date you leave employment if later. Provided you have left your post you can claim
your pension early from age 55, although a reduction will apply. You may also elect to transfer your pension rights to
another provider before your NPA.
Will I receive an annual benefit statement?
If you have deferred benefits in the Scheme then you will receive a benefit statement each year showing the current
value of your LGPS pension. This will include any pension increases awarded.
What happens if I die whilst still in Local Government employment?
If you have deferred benefits in the Scheme, there will be a lump sum death grant payable to your estate of five
times your preserved pension (the death grant of three year’s salary will not apply). There may also be a
pension payable to your spouse/civil partner/cohabiting partner and/or children but these will be based upon your
deferred pension and will not include an enhancement to your NPA.
If I am over age 55 years and made redundant, do I get an immediate unreduced pension?
No. This would only apply if you were paying into the Scheme (an active member). You can elect to take payment of
your deferred pension at age 55 or later, but your pension will be reduced if paid before your NPA.
Can I rejoin the pension scheme at a later date?
Yes. You would need to complete an opt-in form and return this to your employer, who should then action this from
the start of the next pay period. There is no limit to the number of times you can opt in and out of the Scheme.
What do I do to opt out of the LGPS?
Complete the application form over the page, and return it to your Employer’s Payroll Section who will make all the
necessary arrangements.
Opt out form - Notice to opt out of pension saving
Membership of the Local Government Pension Scheme LGPS is not compulsory. An employee can elect to “opt-out”
at any time. If you are considering this option it is important that you fully understand the implications of your
decision. Please read the information accompanying this form. You may also wish to discuss the issues with the
Pensions Department at the above address.
1. What you need to know
 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 – see
www.thepensionsregulator.gov.uk
 If you change your mind you will be able to opt back in at any time by completing a pension joiner form.
 If you stay opted out your employer will normally put you back into pension saving in around 3 years.
 If you change job your new employer will normally put you back into pension saving straight away.
 If you have another job your other employer might also put you into pension saving, now or in the future.
 This notice only opts you out of pension saving with the employer/job title you name below.
 A separate notice must be filled out and given to any other employer you work for if you wish to opt out of that
pension saving as well.
If you want to opt out of the pension scheme fill in this form and give it to your employer
2.
Declaration
 I wish to opt out of the LGPS with effect from
 I have read the accompanying notes and understand the benefits I will be giving up.
 I understand that if I opt out I will lose the right to pension contributions from my employer.
 I understand that if I opt out I may have a lower income when I retire.
 If I have less than 2 years membership I will not rejoin the LGPS within a month and a day of ceasing the
employment in respect of which I am claiming a refund of contributions , and
 I am not currently making contributions to the LGPS (apart from in my current employment), and
 I do not already hold a deferred benefit in the LGPS, and
 I am not in receipt of a pension from the LGPS (other than a widow’s, widower’s civil partner’s cohabitee’s or
other survivor’s pension or a pension awarded to me as part of a Pension Sharing settlement following a
divorce or dissolution of a civil partnership), and
 I have not previously transferred pension rights from the LGPS to an overseas pension scheme.
THIS FORM MUST NOT BE COMPLETED BEFORE YOU START YOUR EMPLOYMENT
SIGNATURE:
SURNAME:
NI NUMBER:
PAYROLL
REF:
DATE:
FORENAME(S):
EMPLOYER:
JOB TITLE:
Contact:
Pensions Section, LB of Barking & Dagenham, Ground Floor Annexe, Civic Centre, Dagenham RM10 7BN
Tel: 020 8227 3343 (A-H) 020 8227 2296 (I-S) 020 8227 2039 (T-Z)
Email: [email protected]