You may be eligible for a refund of contributions that you paid into the local government pension scheme (LGPS) under the following situations:
- If you opt out of the LGPS before completing three months membership you will be treated as never having been a member and your employer will refund to you, through your pay, any contributions you have paid during that time
- If you leave or opt out of the LGPS with three or more months membership and before completing two years membership (known as the vesting period) you can take a refund of your contributions (less any statutory deductions) or transfer out your pension to another scheme
- If you were in the scheme before 1 April 2014 and leave or opt out on or after that date with three or more months membership and before completing the two years vesting period you will also have the option of having deferred benefits (essential freezing your pension) in the scheme instead of taking a refund of your contributions (less any statutory deductions).
If you leave or opt out of the LGPS after meeting the two years period you will have deferred benefits in the scheme (your benefits will essentially be ‘frozen’) and you won’t be eligible for a refund of your contributions.
How long do I have to claim a refund?
If you leave the scheme before completing the two years membership period we will write to you at the time of leaving outlining your options, including claiming a refund.
You can delay your decision until you either a) re-join the LGPS b) transfer your benefits to a new pension arrangement, or c) want to take a refund of contributions.
Where you delay your decision you will have what is known as a deferred refund pension account.
Please note, however, that the account can only be held for a maximum of 5 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.
Interest is paid if the refund is not made within one year of leaving but no refund can be made if you re-join the scheme in England or Wales within a month and a day of leaving or re-join before the refund has been paid. The rate of interest is 1% above base rate on a day to day basis from the date you left the scheme to the day the refund is paid (compounded with three monthly rests). No further interest will be paid on the refund after 5 years.
We will write to you four years and six months after you left, as a final reminder about your refund and how to claim it. We will not include the amount of refund due in that letter, but we will include details of who your employer was when you paid into the scheme and your period of membership. We will include a form that you will need to complete so that we can pay your refund.
Transferring your pension benefits
If you re-join the LGPS with another authority in the future, within five years from date of leaving, you must notify your new authority that you hold a deferred refund with the Avon Pension Fund and this must then be transferred to them.
If you re-join the LGPS with another authority within one month and one day of leaving the Avon Pension Fund we will not be permitted to pay a refund and instead your benefits must be transferred to your new authority. If this is the case, you should notify us of your new authority to enable us to transfer your benefits to them.
If you join a new pension scheme within five years from date of leaving it may be possible to transfer your pension rights instead of taking a refund. It is also possible to transfer to a Personal Pension Scheme provided by an Insurance Company, however, this option is only available to you if you have left the scheme with at least three months membership. If you are interested in this option please ask the administrators of your new scheme to contact the Avon Pension Fund for further details. No transfer payment will be made without your written authority.