Exit credits were first introduced to the Local Government Pension Scheme (LGPS) in 2018. This is where an exiting employer's share of the pension fund is in surplus. Up until 2018 any surplus was retained in the fund and reallocated, usually to an employer with whom the exiting employer had shared a contractual relationship.

The introduction of exit credits allowed pension funds to pay a surplus sum to the exiting employer. An unintended consequence of this is that short term employers (for example, those carrying out a function on behalf of a scheme employer via an outsourcing arrangement) can receive an exit credit where pension risk had been retained by the original employer.

The government has now introduced new regulations, which came into force on 20 March 2020. Administering authorities now have the discretion to determine the amount of any exit credit to be paid. 


We've prepared a draft policy to set out our future approach to the consideration of exit credits. A period of consultation is open until 16 August 2020 to give employers and other stakeholders the opportunity to submit views and comments on the draft policy.

The full details and the draft exit credit policy are available on Derbyshire County Council's website.