Leave before retirement age
If you leave your current employer you have several options on what to do with your accrued scheme benefits. The options depend on how long you have been a scheme member, and whether or not you transferred membership when you joined the scheme.
If you leave the scheme and have been a member for less than the 2 year vesting period, you can choose to receive a refund of the contributions you have paid (net of the statutory deductions) provided that:
- You do not start working for another Local Government employer within 1 month and 1 day of your leaving date.
Please note the Cheshire Pension Fund will have to deduct tax and an amount equivalent to the National Insurance you would have paid (to repay on your behalf) if you had not been a member of the scheme.
If you joined the scheme before 1 April 2014, left with less than the 2 years vesting period but have more than 3 months membership you can:
- Take a refund of your pension contributions; as long as you meet the criteria above and have elected to receive the refund within 6 months of leaving
- Have a deferred pension which increases in line with inflation until payment; or
- Transfer your pension benefits to another scheme.
The vesting period
The vesting period refers to the period of time that you must be an active member of the LGPS before becoming entitled to benefits under the scheme. The vesting period in the LGPS is 2 years, however, it can be met before 2 years in certain circumstances. You will meet the 2 year vesting period if any of the following conditions apply:
- You have been a member of the LGPS in England and Wales for 2 years
- You transferred a pension into the LGPS from a different occupational pension scheme or from a European pensions institution and, the length of service you had in that scheme or institution was 2 or more years or, when added to the period of time you have been a member of the LGPS the period is in total more than 2 years
- You have brought a transfer of pension rights into the LGPS in England or Wales from a pension scheme or arrangement where you were not allowed to receive a refund of contributions
- You have previously transferred pension rights out of the LGPS in England or Wales to a pension scheme abroad i.e. to a qualifying recognised overseas pension scheme
- You already hold a deferred benefit or are receiving a pension from the LGPS in England or Wales (other than a survivor’s pension or pension credit member’s pension)
- You have paid National Insurance contributions whilst a member of the LGPS and you stop paying into the LGPS in the tax year of attaining pension age
- You cease to contribute to the LGPS at age 75
- You die in service
If you have been a member for more than 3 months your benefits can be transferred out of the Cheshire Pension Fund at any time after you leave providing that your new employer or pension provider is willing to accept the transfer value.
You should check that your new pension provider will accept transfers and that you are within any time limits they may apply before you request a transfer out of the Cheshire Pension Fund.
If you have less than two years membership at the date you leave and after one year you decide not to transfer your benefits, you will receive a refund of your contributions (plus interest).
The Government announced in the 2014 Budget that reforms to workplace pensions would be made to offer greater flexibility in the way individuals aged 55 and over can access any Defined Contribution (DC) pension savings they may have. These changes became effective on 6 April 2015.
It’s important that as a member of the Local Government Pension Scheme (LGPS) you understand that you are a member of a public sector Defined Benefit (DB) scheme and therefore the flexibilities introduced under ‘Freedom and Choice’ do not impact on how you can take your Defined Benefits from the LGPS.
There are however, some indirect changes which that will impact members of the LGPS who are considering transferring the value of their accrued LGPS Defined Benefit pension rights from the LGPS to a DC arrangement offering flexible benefits.
The LGPS have produced Freedom and Choice questions and answers to help you understand the changes.
Once you have 2 years of membership in the Scheme (or less if you have transferred previous pension rights in), your benefits will be deferred in the Cheshire Pension Fund until you reach your normal retirement age. During the time your benefits are deferred in the Fund, they will be revalued in line with the Consumer Price Index (CPI) each year from the date you leave.
If you joined the scheme before 1 April 2014 you may also choose to take a refund or transfer your benefits. You can only take these additional options if:
- You left the scheme after 1 April 2014
- You have more than 3 months membership, but less than 2 years membership
Opting out of the LGPS
For more information on opting out of the LGPS click here