The rules of a defined benefit scheme will outline the benefits that may be available to an early leaver.

If an employee leaves with less than 2 years after joining the scheme, then the scheme has the option of refund of personal contributions known as short service refund but it is not compulsory.

If leaving after 3 months within the scheme then the scheme has to provider a Cash Equivalent Transfer Value (CETV)

A refund of contributions is taxed with the first £20,000 taxed at 20% with any excess taxed at 50% and the scheme administrator will have the tax liability on them.

NB The Pensions Act 2014 includes legislation to abolish short service refunds where a member leaves a Money Purchase (not DB) occupational scheme with less than 2 years’ pensionable service