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Opting out

Details for if you are considering opting out of the Scheme.

You may be thinking of opting out of the Local Government Pension Scheme (NI) (the Scheme) for a variety of reasons. Whatever the reason, it’s worth taking some time to look at the benefits you could be giving up.

Currently, the full amount of the new State Pension is £221.20 per week (2024/25 rates) for a single person.  The money you get from a workplace or other pension could make it much easier for you financially when you are retired.

Opting out will not save you as much in take-home pay as you may think. In most cases, you will pay more tax if you opt out. For example, a basic rate taxpayer paying pension contributions of £100 a month will pay £20 more tax if they opt out.

If you opt out of the Scheme, we cannot pay you your pension until you leave that employment and have reached the age at which pension benefits can be paid (i.e. your Normal Pension Age or your pension can be paid earlier on a reduced basis from age 55).

As a member of the Scheme you will be provided with:

  •  a secure future retirement income – a pension
  •  early retirement benefits on permanent ill-health
  •  benefits payable on redundancy or efficiency retirement providing you are aged 55 or over
  •  options for early, late and flexible retirement
  •  tax relief on your pension contributions
  •  the option at retirement to exchange part of your pension for some tax-free cash
  •  life cover of three times your assumed pensionable pay
  •  survivors’ pensions payable to your spouse, civil partner, eligible cohabiting partner and/or eligible children

If you are thinking of opting out for financial reasons, you might want to consider reducing your contributions using the 50/50 section instead. The 50/50 section allows you to pay half the contributions and build up half the amount of pension. However, you will still keep the full value of life cover. This can be used as a short-term option if your financial circumstances are difficult, instead of opting out of the Scheme. To move to the 50/50 section please complete form LGS12 (see link on the bottom of the page) and return to your employer.

If you do decide to opt out you should complete all sections of the LGS2 – Opt-out Notice and return section A to your employer and section B and C directly to NILGOSC (see links on the bottom of this page).

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