Considering opting out?

The rising cost of living is giving lots of people new money worries. The energy crisis, increased mortgage payments, high fuel costs are all having an impact.

We understand that contributing to a pension may seem like an unnecessary luxury and that opting out of the scheme may seem a sensible option but...

If this is something you are thinking about, make sure you understand what the Local Government Pension Scheme (LGPS) gives you:

  • A secure pension for life, with annual adjustments in line with the cost of living.

  • A tax-free lump sum when you retire

  • Ill-health retirement if you have to stop work due to a serious illness.

  • Redundancy retirement benefits if you’re made redundant or retired on business efficiency grounds after age 55.

  • Death benefits for your family – including a partner’s pension and children’s pensions PLUS a cash lump sum of three times your pay, paid to the person of your choice.

In addition, your employer pays a large pension contribution on your behalf (more than double, sometimes triple what you pay) and therefore contributes substantially towards your standard of living in retirement. We recommend you take financial advice before you opt out of the LGPS.

Reducing your contributions

Did you know you can reduce your contributions but remain in the scheme?

You can pay half your normal contributions in return for half your normal pension. It's called the 50/50 section of the scheme and is designed to help members when times are financially tough.

You retain death in service and survivor benefits when you are in 50/50 section. You’ll need to speak to your employer if you would like to move into the 50/50 section, they can give you a form to complete.

The 50/50 option is designed to be a short term solution. You will be auto enrolled back into the main section of the Scheme in line with your employer's automatic re-enrolment date, so at least after three years. You will also be put back into the main section of the Scheme during any period of absence due to absence or injury where you are receiving no pay. If you wish to continue to use the 50/50 option you must make a further election to your employer.

You can of course choose at any time to move back to the main section of the Scheme and your employer will do that from the pay period following your written request.

Further support

The LGPS member website has a:

Calculator which shows the cost of your contributions if you moved to the 50/50 section.

Access calculator here

A set of questions and answers related to the cost of living crisis - access these here