Leaving the LGPS: deferred pension, refund or transfer

What you get when you leave a Local Government Pension Scheme (LGPS) job depends on one test: whether you have two years of membership, called the qualifying period. With two years you have a deferred pension that stays in the scheme and grows each April. With less, you can take a refund of your own contributions, transfer the value elsewhere or, for a limited time, wait. This guide covers England and Wales.

Two years or more: deferred benefits

If you leave before retirement with two years of membership, you hold a deferred pension. It is worked out in the same way as for current members, and it increases every April with the cost of living. If prices have fallen, it does not go down. The LGPS site lists a 3.8 per cent increase in April 2026.

A deferred pension is held in the scheme until you take it or transfer it. You can generally take it at any time between 55 and 75, with the earliest age rising to 57 from April 2028. If you are too ill to work, it can be paid at any age. A death grant is generally paid if you die as a deferred member, and your partner and children can receive pensions. The death grant guide has the details, and the early and flexible retirement guide covers how reductions work.

Under two years: refund, transfer or wait

If you have not met the qualifying period you generally have three options.

1. Claim a refund of your pension contributions. Tax of 20 per cent is deducted from the refund. Your own additional contributions and any AVCs paid by salary sacrifice are included, except AVCs paid for life cover.
2. Transfer the cash value to another pension arrangement. This is open if you have been a member for more than three months, and there is usually a time limit after leaving.
3. Delay the decision, for up to five years or until age 75 if earlier.

If the refund is paid more than a year after you left, the fund adds interest at 1 per cent above base rate. You cannot take a refund if you rejoin the LGPS within a month and a day of leaving, or if you rejoin before claiming one. You also cannot claim one if you pay into the LGPS in more than one job and remain a member in the job that continues.

Members who joined before 1 April 2014 and leave with between three months and two years’ membership have an additional choice of a refund or a deferred pension. They must claim a refund within six months of leaving.

Less than three months: treated as never joined

If you opt out before completing three months, you are treated as never having been a member and your employer refunds the contributions taken from your pay. After three months but under two years, the options above apply. After two years, opting out gives you deferred benefits. There are two differences from leaving a job: you cannot draw the deferred pension until you have left the job (unless you reach 75), and if you rejoin you cannot join the two periods of membership together, so you end up with two separate sets of benefits. Your employer cannot give you an opt-out form. You get it from your pension fund, and the opting out guide looks at the choice itself.

Extra contributions when you leave

If you bought extra pension through additional pension contributions or additional regular contributions, you are credited with the extra pension when you leave, and it adds to your deferred benefits and any transfer value. In-house AVCs stay invested, and you cannot pay in after leaving. Any life cover bought through AVCs stops. You can transfer your AVC, take it when you take your pension, or move it to your new fund’s arrangement if you rejoin. If you were buying added years and rejoin within a year, you can continue if you contact your new fund within three months and agree to cover the gap.

More than one job

If you pay into the LGPS in two jobs and leave one, your pension from the job you left is moved automatically into your continuing pension account. If you qualified for a deferred pension in the job that ended, you may choose to keep it separate. You must decide within 12 months, unless your employer allows longer.

What to check

Ask for a leaving statement and the fund’s forms. Note any deadline for a transfer out. If you are moving to the NHS, teaching or the Civil Service, the pension transfer guide explains how a transfer between public schemes works. Take care with any unsolicited transfer offer, since pension scams target deferred members. An independent financial adviser or MoneyHelper can help with the decision, and your fund can give figures.