If you used to pay into the LGPS and you neither qualified for deferred benefits on leaving, transferred your pension rights into another LGPS employment or onto a new pension provider nor claimed a refund of your contributions, your contributions will be held in the LGPS until you decide what to do with them - this is known as a deferred refund.
You can claim a refund of your contributions, transfer your pension rights to a new pension arrangement, or hold onto your deferred refund, delaying your decision until you know what you’d like to do.
Only your contributions are refundable (including any additional contributions you have paid) – those paid by your employer are not.
Your refund payment will usually amount to less than your gross pension contributions: while you were a member of the LGPS, you were not a member of the additional state pension scheme (SERPS or S2P). This usually means that you paid reduced national insurance contributions, at the contracted-out rate. When you take a refund from the LGPS, you must be contracted back into SERPS or S2P for the period of your local government employment and your share of the cost of reinstatement must be deducted from your refund payment.
The Inland Revenue claim 20% of all refund payments – this is also deducted from your refund payment.
Taking a refund means giving up valuable benefits: if you re-enter local government employment in the future, this period cannot count as LGPS membership.
If a refund is paid more than 12 months after you leave, interest will be added from the date you leave.
No refund can be paid if you leave the LGPS in England and Wales and rejoin that scheme, or you leave the LGPS in Scotland and rejoin that scheme, within a month and a day of leaving or before the refund has been paid.
Once you know what you want to do with your deferred refund, contact your pension fund administrator.