Your USS Journey
Presentation for USS members
Eifion Morris APMI
Every effort has been made to present accurate information. Members are advised to check with their employer and/or the USS guides to confirm
their understanding before acting on any information given. This presentation may be recorded for training and audit purposes.
Agenda
1
• How much will your pension be?
2
• Getting more out of USS
3
• Keep your house in order
4
• What if you leave?
5
• When can I stop working?
6
• Questions?
How much will your
pension be?
The basics
The calculation
Each year your pension & tax-free cash are calculated and ‘banked’
What is salary?
Your
contributions
each year (1
April to 31
March)
Divided by
the
contribution
rate (6.5%)
Salary to work
out pension
Working out the pension
£2,600
1/80th
6.5%
£40,000
pa
£40,000
£500.00
pa
Example
Pension calculation Pension for year Banked pension
Salary in year
£40,000
1/80 X £40,000
£500.00
£500.00
£42,000
1/80 X £42,000
£525.00
£1,025.00
£43,500
1/80 X £43,500
£543.75
£1568.75
£45,000
1/80 X £45,000
£562.50
£2131.25
TOTAL
£2131.25 pa
We now need to add increases ‘revaluation’
What does ‘Revalued’ mean?
Pension calculated each year & ‘banked’
Increases applied to pension earned
Increases to official pensions
USS increase
5% pa or less
Increases matched
More than 5% pa but less than 15% pa
5% plus 50% of increases above 5%
More than 15% pa
Overall ceiling of 10% pa
Example
Pension for
year
Banked
pension
Inflation calculation
£500.00
£525.00
£543.75
£500.00 X 1
(£500.00 X 1.02) + £525.00
(£1,035.00 X 1.03) + £543.75
£500.00
£1,035.00
£1,609.80
£562.50
(£1,609.80 X 1.015) + £562.50
£2,196.45
TOTAL
£2,196.45 pa
Tax-free cash of 3 X pension in
addition
Getting more out of
USS
Put more in to get more out
Revalued Benefits
AVC
Money purchase
15% maximum £
Up to £50,000 pa
Tax relief
Tax relief
Certainty
Flexibility
Tax-free cash
Tax-free cash
Long-term saving
Long-term saving
Help from the tax man
• £100 from net
pay
Pay
Invest
• £125
• £125 (returns
dependent on
investment)
Retire
Help from the tax man
• £100 from net
pay
Pay
Invest
• £166
• £166 (returns
dependent on
investment)
Retire
Tax allowances
Annual Allowance
• £50,000 pa
• 1 year of service X salary of £210,480.00 pa
• Plus Money Purchase AVC contributions
• £40,000 pa wef April 2014
Lifetime Allowance
• £1.5 million
• Pension of £65,217 pa
• £1.25 million wef April 2014
USS tax options
Added years modeller
Money Purchase AVC calculator
www.pru.co.uk/uss
How to pay AVCs
Revalued
Benefits
• Use modeller on
www.uss.co.uk
• Contact Pensions Office
Money
Purchase
• Contact Prudential directly
• Personal consultation
• 0800 2346913
Keep your house in
order
Transfers in to USS
Transfer previous benefits to USS
Beneficial Club transfers
• Two year time limit on transfers from the Public Sector
• Treated as ‘Final Salary’ benefits
Transfer request form – www.uss.co.uk
Benefits for your dependants
Life assurance of 3 x salary
Income protection
• Spouse/dependant/civil partner
• Children
Update your beneficiary details
• Death benefit nomination form (3 x salary)
• Registration of financial dependant form (dependant’s
pension)
Dependant’s pension – how much?
Pension
earned in
last 12
months
Multiplied
by years
until age 65
Add to
pension
already
earned
Then, it’s a
% of that
figure
Dependant’s pensions
Spouse/Civil Partner
• 50% of projected pension
Children
• 2 or more children 75% of projected
pension
• 1 child 37.5% of projected pension
What if you leave?
Benefits on leaving
More than 2
years service?
Less than 2 years
service
Pension earned to leaving
date
Refund of your
contributions (except
salary sacrifice) less tax
and NI
Plus 3 X Pension as cash
Increases apply up to
retirement
Pension based on your
contributions only
Options after leaving
Transfer
out?
Draw at
retirement
Rejoin?
Plus deferred
pension increases
from leaving to
retirement
Re-link to earlier
membership and
add to deferred
pension
At any time
To any UK and many
overseas schemes
Full value of benefits
When can you stop
working?
Normal retirement
Retirement at the Normal Pension Age applicable
• No ‘early retirement’ reductions
NPA to increase in line with State Pension Ages
• 1 October 2020
66
• timetable to be announced for increase to State Pension Ages
Retirement before NPA will be classed as early retirement
• but only in respect of service after any increase
Future increases to NPA - 66
65
100%
100%
96%
October 2020 NPA increases to 66
65
Early retirement
Own choice
• Reductions apply for each year
earlier than Normal Pension Age
Redundancy
• Until 1 October 2014 no reductions
apply
Flexible
retirement
• Take some of your pension and keep
working, reductions may apply
Incapacity
retirement
• Income if your ability to work is
limited by ill-health
Varying pension and cash
Vary the cash
Maximum 25%
of capital value
• less cash and higher pension
• More cash and lower pension
• Multiply your pension by 20
• Add on tax-free cash
• Add on any Prudential AVCs
What next?
What next?
• Pensions office contacts
• Prudential – www.pru.co.uk/uss
– 0800 234 6913
• USS website – www.uss.co.uk
– Slides available here
– Pensions TV
Your questions
Pension increases
In line with ‘Official pensions’
• Civil Service, NHS, Teaching etc
Consumer Price Index used as measure of inflation
• Increases are capped
Pensions increases
Matches Official pensions up to 5%
5% plus 50% of increases above 5%
Overall ceiling of 10% pa