What is a deferred pension?
A deferred pension applies to a member that has stopped paying into the local government pension scheme (LGPS) but is not yet retired.
If you are a deferred member, then your benefits are “frozen” or “preserved”. These benefits however attract an annual increase to keep up with the cost of living - even though you no longer work for the employer. This is known as the pension increase.
If you leave your job before retirement and were paying into the scheme for two years (known as the vesting period) you will have built up an entitlement to a pension. You will have two options:
- you can choose to keep your benefits in the LGPS. These are known as deferred benefits (essentially the benefits you have built up are frozen or preserved) and will increase every year in line with the cost of living, or
- alternatively, you may be able to transfer your deferred benefits to another pension arrangement.
If you leave your job before retirement and have not met the two years vesting period you will have three options:
- you will normally be able to claim a refund of your contributions, less a deduction for tax
- you may be able to transfer your benefits to a new pension arrangement (providing you have been a member of the LGPS for at least 3 months)
- you can delay your decision until you either re-join the LGPS, transfer your benefits to a new pension arrangement, or want to take a refund of contributions.
If you delay your decision you will have what is known as a deferred refund pension account. This account can only be held in your Pension Fund for a maximum of five years or until age 75, whichever is earlier. If you have not transferred your benefits to a new pension arrangement or re-joined the LGPS by that time a refund of contributions will automatically be payable to you.
If you have not met the two years vesting period when you leave but joined before 1 April 2014 and you have three or more months’ membership you will have an entitlement to a deferred benefit instead of a refund (but you can opt within six months of leaving to receive a refund if you wish).
More details about refunds can be found in the Leaving your job before retirement guide
Your annual deferred pension statement
As a deferred member you will receive a pension benefit statement, every year, usually by the end of August, which shows the benefits you have built up and any pensions increase that has been applied and how much they will be worth on retirement.
You can also view your statement online by signing up to 'my pension online'.
Keep in touch
if you change address or contact details please let us know. If you don’t keep us updated with your contact details it may cause a delay in issuing your payment when it is due. If you sign up to my pension online you can update your details at any time.