When there’s a need to cut back on spending, many people naturally think that a quick way to increase their net pay is to opt out of the pension scheme, even though they know that being a member is a good thing. There are many benefits of being a member of the Local Government Pension Scheme (LGPS).
An alternative to opting out
If you’re considering leaving the LGPS because of the cost, you can stay in but pay less. There's an option called 50/50 which lets you pay half of your standard contribution. In the 50/50 you:
- build up half the pension
- keep your full death in service protections
- keep your ill health protections
If you have more than one job you can be in 50/50 for some jobs and keep your standard contributions for others.
50/50 is designed to be a temporary solution. Your employer will bring you back into the main scheme every 3 years.
You can find out more about 50/50 on our contribution flexibility page, which includes information about how to apply. Our ‘Pension option form’ is also attached to this page, which you can use to change to the 50/50 section.
What you lose by opting out
Being a member of the LGPS is one of the main benefits of your job. You may want to take independent financial advice before making a decision to opt out.
Here's what you’ll lose by opting out:
- a guaranteed, secure pension when you retire
- life cover, and a pension for your family in the event of your death
- an ill health pension if you become too ill to work again
- immediate payment of your pension if you’re made redundant or retired by your employer at 55+
- automatic tax relief on your LGPS contributions
- the significant contribution to your LGPS pension made by your employer, which they won’t maintain for a different pension arrangement
How to opt out
If you decide to cancel your LGPS membership:
- you can opt out from the next time you receive your monthly pay
- you’ll be brought back into the pension scheme by your employer every 3 years if you meet the criteria for automatic enrolment
- you won’t be allowed to join together your LGPS membership from before opting out with any future membership of the scheme
If you still want to opt out after reading about the 50/50 section and the main benefits of the LGPS which you’ll lose out on, you’ll need to complete the ‘Opt out form’ attached to this page. There’s a 'guidance' section, a 'what you need to know' section and a 'declaration' you must carefully read and understand.
The Fund's 'Opt out form' is a fillable PDF. If you’re unable to complete the form electronically, you can contact us for a printed copy.
Completed opt out forms must be returned to employers and not to the Fund.
If you opt out within 3 months of joining the LGPS, your employer will refund any contributions you’ve paid since joining the scheme and you’ll be treated as not having joined.
Opting out and your employer
Your employer isn’t allowed to:
- give you a copy of the Fund's 'Opt out form'
- ask you to opt out
- force you to opt out
- complete the Fund's 'Opt out form' for you
You should talk to your employer in the first instance if you have any concerns, but if you don't feel you can, please let us know. You can also tell the Pensions Regulator. They will use the information you provide when they review your concerns.
Links to useful documents