If you choose to leave public service, you have two options as an OPERS member: you can either leave your account on deposit with OPERS or get a refund of your contributions. Both options will impact your status with OPERS.
Specific information about Traditional Pension Plan refunds can be found on this page. To learn the basics of refunding, review the refunds page.
A pension refund is a repayment of the contributions you’ve made to a pension fund. This means you can get back the money you’ve paid into your pension, rather than waiting until retirement to access it.
There are several situations in which you might be eligible for a pension refund:
- Leaving a pension scheme within 30 days of joining: If you decide to opt out of a workplace pension scheme within a month of joining, you are usually entitled to a refund of any contributions you’ve made.
- Leaving a defined benefit pension scheme within 2 years: For defined benefit pension schemes, including final salary and career average pensions, you may be entitled to a refund of your pension payments if you leave within 2 years of joining.
- Leaving the NHS pension scheme before reaching pension age: If you leave the NHS pension scheme before reaching pension age, you can reclaim your pension contributions.
- Leaving a teacher pension scheme with less than 2 years of service: For teacher pension refunds, you can claim the refund if you have less than two years of qualifying service.
How to Get a Pension Refund
To get a pension refund, you typically need to contact your pension scheme provider and request the refund. They will be able to provide you with specific instructions on how to proceed.
Here are some general steps involved in getting a pension refund:
- Check your eligibility: Make sure you meet the eligibility requirements for a pension refund. This information can usually be found on your pension scheme provider’s website or by contacting them directly.
- Contact your pension provider: Once you’ve confirmed your eligibility, contact your pension provider and request the refund. They will likely ask you to complete some paperwork, such as an application form.
- Provide necessary information: You may need to provide your pension provider with additional information, such as your National Insurance number and bank account details.
- Receive your refund: Once your application has been processed, your pension refund will be sent to your bank account.
Tax Implications of Pension Refunds
It’s important to be aware of the tax implications of pension refunds before you request one. In the UK, pension refunds are subject to income tax at varying rates.
Here’s a breakdown of the tax implications:
- First £20,000 of contributions: Taxed at 20%
- Contributions above £20,000: Taxed at 50%
This taxation is non-recoverable and happens regardless of tax relief at the time of refund or permissible when contributions were initially made.
Alternatives to Pension Refunds
Before requesting a pension refund, it’s worth considering other options. Here are some alternatives to consider:
- Transfer your pension: You can transfer your pension to a different scheme, which may offer better benefits or investment options.
- Leave your pension invested: You can leave your pension invested and continue to build up your retirement savings.
- Take a phased retirement: You can take a phased retirement, which allows you to gradually reduce your working hours while still drawing on your pension.
Pension refunds can be a useful option if you need access to your retirement savings before reaching retirement age. However, it’s important to be aware of the tax implications and consider other options before making a decision.
If you’re considering a pension refund, it’s always best to speak to a financial advisor to get personalized advice.
Leaving your Account on Deposit in the Traditional Pension Plan
Members of the Traditional Pension Plan who opt to leave their money with OPERS do not incur any fees or penalties.
If you leave your position covered by OPERS, you are not required to return your contributions. Members of the Traditional Pension Plan do not incur any fees or penalties for keeping their account deposited with OPERS.
You are permitted to keep your account with OPERS deposited after leaving the public service until:
- You choose to take a refund of your account
- You receive a retirement benefit
- When you reach the age of Required Minimum Distribution, you have to take a refund or start getting a retirement benefit (if qualified).
- Alternatively, your funds will be distributed to your dependents and/or beneficiaries upon your passing (for further information, refer to the Survivor Benefits pamphlet).
Benefits of leaving your account on deposit with OPERS
- You may be eligible to receive a benefit. Depending on your age and retirement group, you may be eligible for a retirement benefit if you have contributed service credit to the plan for at least five years. To learn more, see the Retirement Eligibility section.
- You may qualify for additional benefits. You are eligible to receive survivor benefits for your survivors if you have completed 18 months of contributing service credit in the Traditional Pension Plan, with three of those months occurring within the last 30 months. You can still apply for disability benefits if you have at least five years of contributing service credit and become permanently disabled within two years of ceasing to participate in the plan.
- You can accrue interest on your account. Interest on your employee contributions and any money paid to acquire service credit will still be earned by you. The annual interest granted is the interest rate that is in force at that particular time. Every year, the OPERS Board of Trustees determines the rate.
Should I Take My Pension In Payments Or As Lump Sum?
FAQ
Can I cash out my pension if I quit?
Can you get your money back from people’s pension?
What is the return on a pension?
Is a pension your money?
What is a pension refund?
A pension refund is a repayment of the pension contributions you’ve made to a given pension fund. Who is eligible for a pension refund? Those who have chosen to leave their workplace pension scheme within 2 years of joining are entitled to a refund of the pension contributions paid over that time period. How can I request a pension refund?
Can I get a refund of my pension contributions?
Depending on your specific circumstances, you may be able to get a refund of your pension contributions. To find out if you can claim back pension contributions and what options you have specifically, you should contact your pension scheme provider. What is a pension refund?
How does a UK pension refund work?
After processing, the pension refund is sent to the individual’s bank account or payment order, perhaps with National Insurance and income tax deductions. The timing of a UK pension refund depends on the pension scheme and the employer or pension provider’s responsiveness.
When should I get a UK pension refund?
The timing of a UK pension refund depends on the pension scheme and the employer or pension provider’s responsiveness. Refunds may affect future retirement benefits; therefore, individuals should also consider transferring pension rights or connecting membership before seeking a refund.