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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 members Eifion Morris APMI
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Agenda 1 How much will your pension be? 2 Getting more out of USS 3 Tax relief limits 4 Bereavement benefits 5 When can I stop working? 6 USS Valuation 7 Questions?
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How much will your pension be?
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The basics
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The calculation
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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
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Getting more out of USS
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Put more in to get more out Added years 15% maximum £Tax reliefCertaintyTax-free cashLong-term saving Money purchase Up to £40,000 paTax reliefFlexibilityTax-free cashLong-term saving
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Help from the tax man £100 from net pay Pay £125 Invest £125 (returns dependent on investment) Retire
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Help from the tax man £100 from net pay Pay £166 Invest £166 (returns dependent on investment) Retire
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Tax allowances Annual Allowance £40,000 pa wef April 2014 Lifetime Allowance £1.25 million wef April 2014
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Would you be affected? £150K£43,498£50,267£57,036£63,804 £140K£47,248£60,216£73,183£86,151 £130K£43,873£55,915£67,956£79,997 £120K£40,499£51,614£62,729£73,844 £110K£37,124£47,312£57,501£67,690 £100K£33,749£43,011£52,274£61,536 £90K£30,374£38,710£47,046£55,383 £80K£26,999£34,409£41,819£49,229 £70K£23,624£30,108£36,592£43,075 £60K£20,249£25,807£31,364£36,922 £50K£16,874£21,506£26,137£30,768 £40K£13,500£17,205£20,910£24,615 10203040 Years of service Annual salary Annual allowance
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Lifetime allowance Years of service Annual salary £150K £ 431,250 £ 646,875 £ 862,500 £ 1,078,125 £ 1,293,750 £ 1,725,000 £140K £ 402,500 £ 603,750 £ 805,000 £ 1,006,250 £ 1,207,500 £ 1,610,000 £130K £ 373,750 £ 560,625 £ 747,500 £ 934,375 £ 1,121,250 £ 1,495,000 £120K £ 345,000 £ 517,500 £ 690,000 £ 862,500 £ 1,035,000 £ 1,380,000 £110K £ 316,250 £ 474,375 £ 632,500 £ 790,625 £ 948,750 £ 1,265,000 £100K £ 287,500 £ 431,250 £ 575,000 £ 718,750 £ 862,500 £ 1,150,000 £90K £ 258,750 £ 388,125 £ 517,500 £ 646,875 £ 776,250 £ 1,035,000 £80K £ 230,000 £ 345,000 £ 460,000 £ 575,000 £ 690,000 £ 920,000 £70K £ 201,250 £ 301,875 £ 402,500 £ 503,125 £ 603,750 £ 805,000 £60K £ 172,500 £ 258,750 £ 345,000 £ 431,250 £ 517,500 £ 690,000 £50K £ 143,750 £ 215,625 £ 287,500 £ 359,375 £ 431,250 £ 575,000 £40K £ 115,000 £ 172,500 £ 230,000 £ 287,500 £ 345,000 £ 460,000 101520253040 Would you be affected?
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Added years modeller
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Money Purchase AVC calculator www.pru.co.uk/uss
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How to pay AVCs Use modeller on www.uss.co.uk Contact Pensions Office Added Years Contact Prudential directly Telephone consultation 0800 2346913 Money Purchase
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Bereavement benefits
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Benefits for your dependants Life assurance of 3 x salaryIncome protection Spouse/dependant/civil partner Children Update your beneficiary details Expression of wish form (3 x salary) Registration of financial dependant form (dependant’s pension)
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When can you stop working?
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Normal retirement Retirement at the Normal Pension Age applicable No ‘early retirement’ reductions NPA to increase in line with State Pension Ages 1 October 202066 67 by 2036 68 by 2046 Retirement before NPA will be classed as early retirement but only in respect of service after any increase
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Future increases to NPA - 66 100% 65 100% 96% 65 October 2020 NPA increases to 66
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Early retirement Reductions apply for each year earlier than Normal Pension Age Own choice Pre October 2011 benefits in full All benefits in full if 55 or more on 1 October 2011 Employer consent from 60 Until 1 October 2014 no reductions apply Redundancy Benefits in full Severance
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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, 3 rd 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
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Incapacity retirement Pension based on service to 65 Total incapacity Pension based on service already earned Partial incapacity
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Varying pension and cash No cash and higher pension Higher 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
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Scheme Valuation 2014
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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?
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What next?
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Pensions office contacts Prudential www.pru.co.uk/uss 0800 234 6913 www.pru.co.uk/uss USS www.uss.co.uk Pensions TV www.uss.co.uk
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Your questions
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Money Purchase AVC fund early exit charge Year of withdrawal% of fund withdrawn During Year 115% During Year 210% During Year 38% During Year 46% During Year 55% During Year 6 onwardsNo charge
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Pension increases In line with ‘Official pensions’ Civil Service, NHS, Teaching etc Benefits earned before 1 October 2011 no cap Benefits since 1 October 2011 capped Service before 1 October 2011Since 1 October 2011 Matches official pensions with no capMatches up to 5% 5% plus 50% of increases above 5% Overall ceiling of 10% pa
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Pensionable Salary Calculated in most favourable wayBased on last 13 years’ salary historyAll salaries indexed by RPIBetter of: Best 12 months in last 36, or Best average over 3 years falling in last 13 years
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Pensionable salary calculation Retirement40000X193.5/193.5=40000 238889X193.5/188.6=39982 337612X193.5/182.6=39857 436501X193.5/177.9=39701 534914X193.5/174.3=38760 633327X193.5/171.6=37580 731740X193.5/166.5=36887 830153X193.5/164.5=35468 928566X193.5/159.5=34655 1036500X193.5/153.8=45922 1131740X193.5/149.8=41000 1228566X193.5/145.2=38068 1322218X193.5/141.830318 YearSalaryRPI increase Revalued salary = 41663 Back
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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
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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
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