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
2
3
4
5
6
7
• How much will your pension be?
• Getting more out of USS
• Tax relief limits
• Other benefits
• What if you leave?
• When can I stop working?
• Questions?

How much will your pension be?

The basics

The calculation

Part-time calculation
40
30
Salary
£000s
20
10
10 years
100%
10
3 years
30%
20
Years
10 years
100%
30
5 years
50%
40

What will I get?
Years’ service
Pension as % of salary
Full-time member
10 15 20 25 30 35 40 45
13% 19% 25% 31% 38% 44% 50% 56%
If salary was £40,000 with 30 years service benefits:-
Pension of 30/80 X £40,000 = £15,000 pa
PLUS
Tax-free cash of 3 X Pension = £45,000

How big will your pension be?
Average service
32 years
X 1/80th
Average salary
£42,000 pa
Average pension
£16,800 pa

Getting more out of
USS

Put more in to get more out
15% maximum £
Tax relief
Certainty
Tax-free cash
Long-term saving
Up to £50,000 pa
Tax relief
Flexibility
Tax-free cash
Long-term saving

Help from the tax man
• £100 from net pay
• £125
• £125 (returns dependent on investment)

Help from the tax man
• £100 from net pay
• £166
• £166 (returns dependent on investment)

Tax allowances
Annual Allowance
• £50,000 pa
• £40,000 pa wef April 2014
Lifetime Allowance
• £1.5 million
• £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
• Use modeller on www.uss.co.uk
• Contact Pensions Office
• Contact Prudential directly
• Personal consultation
• 0800 2346913

Other benefits

Transfers in to USS
Transfer previous benefits to USS
Beneficial Club transfers
• Two year time limit on transfers from the Public
Sector
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)

What if you leave?

Benefits on leaving
More than 2 years service?
Pension = Service/80 X final pensionable salary
Plus 3 X Pension as cash
Increases apply up to retirement
Less than 2 years service
Refund of your contributions (except salary sacrifice) less tax and NI
Pension based on your contributions only

Options after leaving
Transfer out?
At any time
To any UK and many overseas schemes
Full value of benefits
Draw at retirement
Plus deferred pension increases from leaving to retirement
Rejoin?
Final salary section if within 30 months and benefits left in
USS
Re-link earlier membership

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
100% 65
100% 96% 65
October 2020 NPA increases to 66

Early retirement
Own choice
• Reductions apply for each year earlier than
Normal Pension Age
Employer consent from 60
• Pre October 2011 benefits in full
• All benefits in full if 55 or more on 1 October 2011
Redundancy
• Until 1 October 2014 no reductions apply
Severance
• Benefits in full
Flexible retirement
Incapacity retirement
• Take some of your pension and keep working, reductions may apply
• Income if your ability to work is limited by illhealth

Flexible retirement
Flexible retirement from age 55
• Subject to consent of employer and USS
• 2 months’ notice required by USS
2 ‘Flexes’ possible, 3 rd is full retirement
• Hours must reduce by at least 20%
• Draw up to 80% of benefits (minimum 20%)
• Early retirement reductions apply before age 60
You continue to build up benefits
• If you flex, you continue to build up further benefits on a part-time basis and remaining benefits based on future full-time equivalent pensionable salary

Incapacity retirement
Total incapacity
Pension based on service to
65
Partial incapacity
Pension based on service already earned

Varying pension and cash
Vary the cash • No cash and higher pension
• Higher cash and lower pension
Maximum 25% of capital value
• 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

Money Purchase AVC fund early exit charge
Year of withdrawal
During Year 1
During Year 2
During Year 3
During Year 4
During Year 5
During Year 6 onwards
% of fund withdrawn
15%
10%
8%
6%
5%
No charge

Pension increases
In line with ‘Official pensions’
• Civil Service, NHS, Teaching etc
Consumer Price Index used as measure of inflation
• Benefits earned before 1 October 2011 no cap
• Benefits since 1 October 2011 capped
Service before 1 October 2011 Since 1 October 2011
Matches official pensions with no cap Matches up to 5%
5% plus 50% of increases above 5%
Overall ceiling of 10% pa

Pensionable Salary
Calculated in most favourable way
Based on last 13 years’ salary history
All salaries indexed by RPI
Better of:
• Best 12 months in last 36, or
• Best average over 3 years falling in last
13 years

Pensionable salary calculation
Year
Retirement
2
3
4
5
6
7
8
9
10
11
12
13
Salary
40000
38889
37612
36501
34914
33327
31740
30153
28566
36500
31740
28566
22218
X
X
X
X
X
X
X
X
X
X
X
X
X
RPI increase
193.5/193.5
193.5/188.6
193.5/182.6
193.5/177.9
193.5/174.3
193.5/171.6
193.5/166.5
193.5/164.5
193.5/159.5
193.5/153.8
193.5/149.8
193.5/145.2
193.5/141.8
=
=
=
=
=
=
=
=
=
=
=
=
Back
Revalued salary
40000
39982
39857
39701
38760
37580
36887
35468
34655
45922
41000
38068
30318
= 41663