Presentation for USS members Eifion Morris APMI

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

•Tax relief limits

4

•Bereavement benefits

5

•When can I stop working?

6

•USS Valuation

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

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 £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 wef April 2014

Lifetime Allowance• £1.25 million wef April 2014

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

10 20 30 40

Years of service

Annu

al s

alar

y

Annual allowance

Lifetime allowance

Years of service

Annu

al s

alar

y

£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

10 15 20 25 30 40

Would you be affected?

Added years modeller

Money Purchase AVC calculatorwww.pru.co.uk/uss

How to pay AVCs

• Use modeller on www.uss.co.uk

• Contact Pensions OfficeAdded Years

• Contact Prudential directly• Telephone consultation• 0800 2346913

Money Purchase

Bereavement benefits

Benefits for your dependants

Life assurance of 3 x salary

Income 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)

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 Age

Own choice

• Pre October 2011 benefits in full• All benefits in full if 55 or more on 1 October 2011Employer consent

from 60• Until 1 October 2014 no reductions apply

Redundancy

• Benefits in full

Severance

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 incapacity Pension based

on service already earned

Partial incapacity

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

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

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• 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

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

Back

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