your uss journey every effort has been made to present accurate information. members are advised to...

Your USS Journey

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.

Presentation for USS membersEifion Morris APMI

Agenda

1• How much will your pension be?

2• Getting more out of USS

3• Tax relief limits

4• Other benefits

5• What if you leave?

6• When can I stop working?

7• Questions?

How much will your pension be?

The basics

Pension

Tax-free cash

Standard package

The calculation

1/80th Service Salary Pension

Pension 3 Tax-free cash

Part-time calculation

100% 30% 50%100%

Years

10

20

30

40

10

20

30

40

Salary £000s

10 years 3 years 10 years 5 years

What will I get?

10 15 20 25 30 35 40 45

13% 19% 25% 31% 38% 44% 50% 56%

Years’ service

Pension as % of salary

If salary was £40,000 with 30 years service benefits:-

Pension of 30/80 X £40,000 = £15,000 pa

PLUSTax-free cash of 3 X Pension = £45,000

Full-time member

How big will your pension be?

Average service

32 years

X 1/80thAverage salary

£42,000 paAverage pension

£16,800 pa

Getting more out of USS

Put more in to get more out

Added years15% maximum £

Tax relief

Certainty

Tax-free cash

Long-term saving

Money purchaseUp to £50,000 pa

Tax relief

Flexibility

Tax-free cash

Long-term saving

Help from the tax man

• £100 from net pay

Pay

• £125

Invest • £125 (returns dependent on investment)

Retire

Help from the tax man

• £100 from net pay

Pay

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 calculatorwww.pru.co.uk/uss

How to pay AVCs

Added Years

•Use modeller on www.uss.co.uk•Contact Pensions Office

Money Purchase

•Contact Prudential directly•Personal consultation•0800 2346913

Other benefits

Transfers in to USS

Transfer previous benefits to USS

• Two year time limit on transfers from the Public Sector

Beneficial Club transfers

Transfer request form – www.uss.co.uk

Benefits for your dependants

Life assurance of 3 x salary

• Spouse/dependant/civil partner• Children

Income protection

• Death benefit nomination form (3 x salary)• Registration of financial dependant form (dependant’s pension)

Update your beneficiary details

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 •Take some of your pension and keep working, reductions may apply

Incapacity retirement •Income if your ability to work is limited by ill-health

Flexible retirement

• Subject to consent of employer and USS• 2 months’ notice required by USS

Flexible retirement from age 55

• Hours must reduce by at least 20%• Draw up to 80% of benefits (minimum 20%)• Early retirement reductions apply before age 60

2 ‘Flexes’ possible, 3rd is full retirement

• 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

You continue to build up benefits

Incapacity retirement

Pension based on service to 65

Total incapacit

y

Pension based on service already earned

Partial incapacit

y

Varying pension and cash

•No cash and higher pension•Higher cash and lower pensionVary the cash

•Multiply your pension by 20•Add on tax-free cash•Add on any Prudential AVCs

Maximum 25% of capital value

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 % of fund withdrawn

During Year 1 15%

During Year 2 10%

During Year 3 8%

During Year 4 6%

During Year 5 5%

During Year 6 onwards 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 cappedService 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

• Best 12 months in last 36, or• Best average over 3 years falling in last

13 years

Based on last 13 years’ salary history

All salaries indexed by RPI

Better of:

Pensionable salary calculation

Retirement 40000 X

193.5/193.5 = 40000  

2 38889 X193.5/188.6 = 39982  

3 37612 X193.5/182.6 = 39857  

4 36501 X193.5/177.9 = 39701  

5 34914 X193.5/174.3 = 38760  

6 33327 X193.5/171.6 = 37580  

7 31740 X193.5/166.5 = 36887  

8 30153 X193.5/164.5 = 35468

9 28566 X193.5/159.5 = 34655  

10 36500 X193.5/153.8 = 45922  

11 31740 X193.5/149.8 = 41000  

12 28566 X193.5/145.2 = 38068  

13 22218 X193.5/141.8 30318  

Year Salary RPI increase

Revalued salary

= 41663

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