how uss works every effort has been made to present accurate information. members are advised to...
TRANSCRIPT
How USS works
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
•Transfers in to USS
4
•Bereavement benefits
5
•When can I stop working?
6
•Scheme valuation
7
•Questions?
How much will your pension be?
The basics
Pension
Tax-free cash
Standard package
The calculation
1/80th Salary Pension
Pension 3 Tax-free cash
Each year your pension & tax-free cash are calculated and ‘banked’
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 Inflation calculation Banked
pension
£500.00 £500.00 X 1 £500.00£525.00 (£500.00 X 1.02) + £525.00 £1,035.00£543.75 (£1,035.00 X 1.03) + £543.75 £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
15% maximum £
Tax relief
Certainty
Tax-free cash
Long-term saving
Money purchase
Up to £40,000 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
• £166
Invest • £166 (returns dependent on investment)
Retire
Tax allowances
Annual Allowance• £40,000 pa• 1 year of service X salary of £168,420.00 pa• Plus Money Purchase AVC contributions
Lifetime Allowance• £1.25 million• Pension of £54,347 pa
Tax allowances
Added years modeller
Money Purchase AVC calculatorwww.pru.co.uk/uss
How to pay AVCs
• Use modeller on www.uss.co.uk
• Contact Pensions OfficeRevalued Benefits
• Contact Prudential directly• Telephone consultation• 0800 2346913
Money Purchase
Transferring benefits in to USS
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
Bereavement benefits
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
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 • 67 by 2036• 68 by 2046
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
• Reductions apply for each year earlier than Normal Pension AgeOwn choice
• Until 1 October 2014 no reductions applyRedundancy
• Take some of your pension and keep working, reductions may applyFlexible retirement
• Income if your ability to work is limited by ill-healthIncapacity
retirement
Varying pension and cash
•less cash and higher pension
•More cash and lower pension
Vary the cash
•Multiply your pension by 20
•Add on tax-free cash
•Add on any Prudential AVCs
Maximum 25% of capital value
Scheme Valuation 2014
Valuation 2014
Full valuation in 2014 (3-yearly)
• Large deficit predicted• Valuation as at 31 March 2014 - results late
2014/early 2015• Potential benefit changes/contribution increases?
What next?
What next?
• Pensions office contacts
• Prudential www.pru.co.uk/uss0800 234 6913
• USS www.uss.co.ukPensions TV
Your questions
Benefits on leaving
More than 2 years service?Pension earned to leaving
date
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?
Re-link to earlier membership and add to deferred pension