Opting out

When you leave a scheme, you have several options on what you can do with your pension. Here you will find all the information you need to understand your options.

Opting out of your pension scheme

Leaving so soon?

Paying into a pension can feel like a thankless task when money’s tight and you’re looking for ways to increase your income. But before you opt out of your scheme, it’s worth taking a moment to think it through… or you could end up kicking yourself further down the line.

Have you considered all the facts?

It’s not unreasonable to question whether your money is more useful to you now than in the future – especially if you’ve already built up some retirement savings. But in reality, there’s more to opting out of your pension than freeing up a little extra cash.

  • Tax relief

When you add tax relief to the equation, the cost of being a member is actually much lower than you might think. The more money you put in, the less you pay in tax (and vice versa).

  • Employer contributions

As well as your pension contributions, your employer makes contributions as required by the scheme actuary to maintain the health of the fund, these are often greater than double a members contribution.

  • Deferred benefits

If you opt out of your scheme, you may have to wait until you’re 55 before you can access your deferred benefits … plus you need to be aware that retiring at this age could result in significant reductions being applied to your pension.

Is there anything we could say to change your mind?

Opting out of one of the best pension schemes in the UK is a big decision. And no doubt you have your reasons. But if you are still weighing up your options, here are some good reasons to stay.

  1. A guaranteed index-linked retirement income, payable for life.
  2. A possible tax-free lump sum when you retire.
  3. Your Employer also contributes
  4. A death-in-service lump-sum
  5. A ‘survivor pension’ for your partner and / or child in the event of your death 
  6. A pension paid to you if you become too ill to work.
  7. Tax relief on your pension contributions.

When you’ve gotta go, you’ve gotta go…

We don’t believe in long goodbyes

If you’ve made up your mind and definitely want to leave, we won’t stand in your way. All you need to do is follow these three simple steps.

  • Complete the opt out form

You can download a paper version here or if you work for Lancashire County Council you complete the online version of the form.

  • Return the completed form to your employer

Paper forms should be returned to your Payroll or Human Resources Department.

  • Your employer will remove you from the scheme

After receiving your form, your employer will cancel your payroll deductions and notify us, so that we can process your benefits.

What happens next?

Depending on how long you’ve been a member you can either cash in your contributions or defer your benefits until you retire.

  • Less than 3 months

Your employer refunds your pension contributions in full and you are treated as though you’ve never been a member.

  • Between 3 months and 2 years (not applicable to Fire)

As soon as we get confirmation from your employer, we arrange a full refund – unless you have been a member previously, in which case you may be able to defer the benefits.

  • 2 years and over (including previous memberships) – not applicable to Fire

You are entitled to defer your pension until you retire, or you can choose to transfer your pension to a new provider.

Rules are rules

To comply with the 2008 Pensions Act, your employer has to re-enrol into the scheme every three years. You will be notified when this happens and given the opportunity to opt out again, which you will need to do within 3 months to ensure a guaranteed refund.

Transferring to a different scheme

Off to pastures new?

Although we’d hate to see you go, we understand there may come a time when you want to transfer your pension benefits to another scheme. Before you make any plans, you just need to be aware of the rules.

Transfer rules

  • You must have been paying into your pension for at least 3 months
  • You must be at least 12 months away from Normal Pension Age or a Guaranteed Minimum Pension
  • You must be transferring your benefits to an HMRC registered pension scheme (and in the case of Police or Fire schemes, one that does not provide the option of Flexible benefits)
  • You must not be paying into the LGPS, Police or Fire scheme with any other employer. If you have more than one pension in these schemes, you will need to transfer all of them to your new scheme
  • You must not be in receipt of an LGPS, Police or Fire pension (other than a ‘survivor’s pension’ following the death of a partner or a ‘pension credit’ following a divorce or dissolution of a civil partnership)
  • You must not be retiring immediately

How long will it take?

Every case is different, but the transfer process can often take several weeks due to due diligence checks and HMRC confirmation. Whatever happens, we’ll keep you fully updated along the way.

Is the process the same for overseas transfers?

If you’re transferring to an overseas pension scheme, we are likely to require additional documentation and checks, so it may take a little longer. Again, we’ll keep you fully updated along the way.

How do I get started?

If you want to transfer your pension to another fund, please call the LPPA helpdesk on 0300 323 0260

Don’t take any chances

Please be aware that scammers do operate in these markets. You’ll find more information on how to avoid pension scams here.

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