Factsheets and forms

Opting out of the Local Government Pension Scheme

Opting out of the Local Government Pension Scheme in England or Wales – notice to opt out of pension saving

The Local Government Pension Scheme (LGPS) allows you to save while you are working to enjoy a pension once you retire. It is one of the best occupational pension schemes in the UK. What’s more, the LGPS is provided by your employer who meets a large part of the cost of providing the excellent range of secure benefits, so it’s an extremely valuable and important part of your employment package.

You might be thinking of opting out of the LGPS for a variety of reasons. Whatever the reason, it’s worth taking some time to look at the benefits you could be giving up. A brief summary of these is included in the ‘Declaration’ section of this form.

You can only sign and date the opt-out form once you have started employment in the post which you wish to opt out of the LGPS from. A form signed and dated before then will not be valid.

Opting out won’t save you as much in take home pay as you may think. In most cases, you will pay more tax and National Insurance if you opt out of the LGPS. A basic rate tax payer paying pension contributions of £100 a month will pay £20 more tax and their National Insurance will go up by about the same if they opt out.

If you wish to find out more about the costs and benefits of being a member of the Local Government Pension Scheme you can contact us or find the relevant information on our website.

Although changes to the LGPS came into force on 1st April 2014, please remember that the LGPS is, and will continue to be, one of the best occupational pension schemes in the UK.

Whatever your reasons for considering opting out of the scheme, we ask that you give this matter careful consideration before making a final decision. You may wish to take financial advice before making a decision to opt out. If you are opting out of the LGPS due to advice you have received you should ask for this advice in writing.

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.

Equally, no one can force you to remain a member of the scheme but, if you elect not to be a member, you should understand the implications both for you and your dependants.

If you opt out of the LGPS in an employment (other than a concurrent employment) on or after 11 April 2015 with an entitlement to a deferred benefit and subsequently re-join the scheme you will not be able to aggregate your periods of membership.

If you decide you still want to opt out of the LGPS then you will need to complete the required form which can only be obtained from Peninsula Pensions (see contact details below) or by downloading the form by clicking Opt out form.

Alternative to opting out

As an alternative to opting-out of the Local Government Pension Scheme (LGPS), since April 2014 there has been an option to pay half the pension contributions into the new 50/50 section.

If you choose the 50/50 section option you will pay half of the normal full pension contributions. The effect on your benefits on paying into the 50/50 section is:

  • Pension accrual rate will be 1/98th instead of 1/49th when paying the full pension contributions.  This means you will receive half the full pension benefits for the time you are paying into the 50/50 section.

HOWEVER, the following benefits remain at 100%

  • Ill-health benefits
  • Death benefits
  • Survivors’ benefits

You can choose to opt back in to the 100% section at any time. There is no limit on the number times you can opt between the 50/50 section and main 100% section.

If you elect to join the 50/50 section you will automatically revert back to the 100% section in the following circumstances:

  • If you go onto no pay due to sickness/injury you will be revert to the 100% section at the start of the following month providing you are still on no pay.
  • You will automatically revert to the 100% section on your employer’s re-Auto Enrolment date (check with your employer when this will happen).

On reverting back to the 100% section you can again opt to pay into the 50/50 section.

You can get forms and information about the 50/50 section can from your employer or by clicking on the links below:

The 50/50 scheme
50/50 election form