Transfer from previous employer

alphazulu

I was in my previous pension scheme (USS final salary scheme) for just over two years. Now I have a Civil Service pension (Nuvos career average) since last summer. What would people advise in this situation? I could re-enter USS final salary if I get a university job within the next year but this is unlikely. It doubt I will be in this current job for more than another two years .I'm in my early 30s so retirement is in the very distant future! Should I transfer my USS benefits to Nuvos?

kidmugsy

Nuvos is a scheme guaranteed (I assume) by the government. USS is a private scheme without any government guarantee. If it fails it's far too big to be rescued by the PPF. (It is, I understand, the biggest scheme without a government guarantee.)

On the other hand, eggs and baskets.

hyubh

kidmugsy wrote: »

Nuvos is a scheme guaranteed (I assume) by the government. USS is a private scheme without any government guarantee. If it fails it's far too big to be rescued by the PPF. (It is, I understand, the biggest scheme without a government guarantee.)

An overly dramatic thought I think, given almost all universities in this country are publicly funded. If the public/private sector scheme distinction is seen as a continuum rather than a somewhat blunt legal distinction, the USS is only one step away from the LGPS, which you scream blue murder about but which also doesn't enjoy blanket guarantees from central government (hence the recent controversy over certain county councils' actuarial treatment of academies). That said, for sure, Civil Service Pensions are indeed intrinsically guaranteed by central government, like pretty much all the unfunded schemes.

hyubh

alphazulu wrote: »

I was in my previous pension scheme (USS final salary scheme) for just over two years. Now I have a Civil Service pension (Nuvos career average) since last summer. What would people advise in this situation? I could re-enter USS final salary if I get a university job within the next year but this is unlikely. It doubt I will be in this current job for more than another two years .I'm in my early 30s so retirement is in the very distant future! Should I transfer my USS benefits to Nuvos?

For USS membership post-Sept 2011 there's a slight cap on deferred benefits' inflation proofing. As such, if you think future governments (Conservative or Labour) will change the course of recent monetary policy and allow high inflation, then it might be an idea to transfer. Conversely, the age at which you can draw your benefits without reduction might be lower in the USS, in which case you might prefer to keep the USS pension where it is. Otherwise, get a quote from Civil Service Pensions and compare the pension that would be bought with the USS transfer value with the deferred USS pension - it will probably be very similar given the transfer should be doable on 'club' terms.

alphazulu

I've got the quote and Nuvos calculate it would give me £1200 per year (32000*2.3/60) and my calculation for USS is £920. The difference is due to each year in USS contributing 1/80 annual salary but Nuvos use 1/60 in their calculations.

I'm likely to change jobs a few times before I retire so I was wondering if there is any advantage of having several small pensions over one.

kidmugsy

hyubh wrote: »

An overly dramatic thought I think, given almost all universities in this country are publicly funded. If the public/private sector scheme distinction is seen as a continuum rather than a somewhat blunt legal distinction ...

But why invent that fiction of a continuum? USS on its website is quite explicit (or was when last I looked) that it is a private defined benefit scheme. That the government provides much of the universities' funding is irrelevant: there are companies all over the country whose income largely comes from the government, and their pension schemes are private too.

hyubh

kidmugsy wrote: »

But why invent that fiction of a continuum?

Er, you claimed the crucial implication of the USS being classified as a private sector scheme was the lack of a general government guarantee. However, the LGPS doesn't have one either, yet is a public sector scheme. Conversely, the LGPS (unlike the USS) has the involvement of many non-public sector employers. Ergo, the formal classification of the USS as a 'private sector' scheme has much less significance than you assert.

Of course, this is not to deny it has some significance, hence the idea of a continuum: from non-contributory unfunded schemes (e.g. armed forces pensions), to contributory unfunded ones (e.g. police, teachers, NHS), to funded statutory schemes (LGPS), to funded schemes whose rules aren't a matter of statute yet who involve a certain class of public sector employer (USS). Also, and relevant to the OP, the USS is part of the public sector 'club' arrangment for transfers.

hyubh

alphazulu wrote: »

I've got the quote and Nuvos calculate it would give me £1200 per year (32000*2.3/60) and my calculation for USS is £920.

Is the £920 what your USS 'deferred benefit' statement says too? If you left the USS a few years ago, remember to uprate for inflation as well:

http://www.uss.co.uk/SchemeGuide/FinalSalaryBenefitssection/modellersandcalculators/deferredpensionsincreasemodeller/Pages/default.aspx

kidmugsy

hyubh wrote: »

Er, you claimed the crucial implication of the USS being classified as a private sector scheme was the lack of a general government guarantee. However, the LGPS doesn't have one either, yet is a public sector scheme. Conversely, the LGPS (unlike the USS) has the involvement of many non-public sector employers.

1) But we are not comparing USS with LGPS but with Nuvos. Nuvos does have a government guarantee. USS doesn't. Simples.

2) The USS members I know are all "non-public sector": the government doesn't own their employers, their universities are chartered institutions.

3) But thank you for implying that the general taxpayer won't have to bail out LGPS: good news.

JoeCrystal

kidmugsy wrote: »

3) But thank you for implying that the general taxpayer won't have to bail out LGPS: good news.

Ah, but the council taxpayer may have to instead as each Council or combination of Councils has their own LGPS.

Cheers,
Joe

hyubh

kidmugsy wrote: »

1) But we are not comparing USS with LGPS but with Nuvos.

I was merely disagreeing with your (factually incorrect) assertion that the reason the USS does not have a general guarantee from central government is it being formally classed as a private sector scheme. Thank you for acknowledging the point so gracefully!

The USS members I know are all "non-public sector"

Playing with semantics now are we? Almost all UK universities have state funding, and are usually categorised as 'public' universities accordingly, in contrast to the odd private university over here (the University of Buckingham) and the much broader mix of public and private universities in (say) the US.