Leavers

If members opt out within three months of joining they’ll be treated as never having joined and you can refund their contributions through your payroll. They can’t opt-out before they start work, but they can do it on their first day by filling in an opting-out form and giving it to you.

You must not give members the opting out form. They can get the form from the member area of this site or by phoning or writing to us.

Add them to your monthly return to show them as a new member, and show them as a negative the next month when they have opted out and you have refunded their contributions (if any have been deducted). Don’t forget to recover any member and employer contributions you have paid to us.

Tell us about members who opt out under three months within 6 weeks of opting out.

Members need two years’ qualifying membership (the vesting period) to be entitled to pension benefits. 

If a member wants to opt out and they’ve been in the scheme for three months or more, tell them they need to get an opting out form from us and fill it in. They can get this form from the member area of the website.

Members are treated as normal leavers if they opt out after three months but before two years and are entitled to a refund. We'll pay the refund in this case and you should put a leaving date on your monthly return. When we have processed your monthly return we will send you an email to let you know that your exception reports are ready to access on the employer portal and you should complete the Leaver notification

Leaver notifications should be completed within 10 working days of receiving the exception report.

If the member already has an LGPS deferred benefit (or they are getting a pension) they will be awarded deferred benefits and won’t be entitled to a refund. They can transfer these benefits to another pension scheme if they want to.

If the member opts out or leaves after two years, they are entitled to deferred benefits and you should put a leaving date on your monthly return. When we have processed your monthly return we will send you an email to let you know that your exception reports are ready to access on the employer portal and you should complete the Leaver notification. 

Leaver notifications should be completed within 10 working days of receiving the exception report.

Members with membership before 1 April 2014 have their final salary benefits worked out on their final salary at the leaving date, which is final pay for the last 365 days, full-time equivalent for part-timers.

Example

• A member leaves on 13 August 2023.
• Their final pay period would be 14 August 2022 to 13 August 2023.
• The previous two anniversary years would be 14 August 2021 to 13 August 2022 or 14 August 2020 to 13 August 2021.

Where there is a break in membership in the final year (a break in employment or unpaid leave that the member hasn’t paid contributions for) we gross up their pay to a full year.

If the absence was because of illness or injury, any reduction or loss of pay is disregarded – in other words final pay is worked out as if the reduction or loss of pay hadn’t happened.

From 1 April 2008, members who have their pay cut, or in certain circumstances restricted, have 10 years to choose the best average of any consecutive three years in their last 13 years of membership. This applies even for pay cuts or restrictions after 31 March 2014 provided they were active members before 01/04/2014.

We still need to know members’ final pay (under the 2008 definition) if they have membership before 1 April 2014. Pension benefits for that membership are based on final pay.

The Local Government Pension Scheme (Benefits, Membership & Contributions) Regulations 2007 set out the definition of pensionable pay in Regulation 4.

Meaning of "pensionable pay"

1. An employee's pensionable pay is the total of

• all the salary, wages, fees and other payments paid to him for his own use in respect of his employment; and
• any other payment or benefit specified in his contract of employment as being a pensionable emolument.

2. But an employee's pensionable pay does not include

• (a) payments for non-contractual overtime;
• (b) any travelling, subsistence or other allowance paid in respect of expenses incurred in relation to the employment;
• (c) any payment in consideration of loss of holidays;
• (d) any payment in lieu of notice to terminate his contract of employment
• (e) any payment as an inducement not to terminate his employment before the payment is made.
• (f) the amount of any supplement paid
  - (i) by the Environment Agency; or-
  - (ii) to an employee whose employment is transferred on 1st April 2010, under a staff transfer scheme, from the Learning and Skills Council for England to a local authority or to London Councils Limited, in recognition of the difference in contribution rates between members of the principal civil service pension scheme and the Scheme; or (SI 2010/528)
• (g) any payment by way of compensation for the purposes of achieving equal pay in relation to other employees.
  (SI 2009/3150)

3. No sum may be taken into account in calculating pensionable pay unless income tax liability has been determined on it.

CPP is the total of the actual pensionable pay the member paid pension contributions on and/or the assumed pensionable pay (in either section of the scheme) in the scheme year. If APP has been calculated it replaces the CPP.

Always provide CPP separately for the main and 50/50 sections, which have different accrual rates.

Example – moving sections within the same year

A member is on a salary of £24,000 for the full scheme year and moves to the 50/50 section after three months. They will have already earned £6,000. They stay in the 50/50 section for five months and earn £10,000.

They then move back to the main section and earn another £8,000. So their cumulative pay at the end of the scheme year is £14,000 in the main section and £10,000 in the 50/50 section.