new to proper jobs and pensions...

JoeCrystal

wallofbeans wrote: »

Well, that's great news! I won't then!

What do 'DB' and 'DC' stand for?

Have a look at this website. It might help a little.

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

It stands for the Defined Benefit and Defined Contribution

I personally got Defined Contribution Pension Plan which I pay monthly contribution [with pitiful 1% Employer contribution] and the fund get invested into stock market and hope for the best, if I am really lucky, I get a good return and get an income based on the pension fund value when I retre. Of course, the market could totally crashed and I get much less income. It is reckoned that it would cost 25% or more of the salary to get similar benefits as Defined Benefit Pension. I tend to think that is conservative estimate personally.

Defined Benefit Pension? Ah well, the website can explain it better than I can. It is very different league. Consider yourself lucky with that and please do not opt out!!!

hyubh

wallofbeans wrote: »

I don't know what DB or DC means. I'm working for a university and it says it's the Universities Superannuation Scheme (USS).

Does that mean anything to you?

The USS is currently a pure defined benefit (DB) scheme; you'll be entering the CARE (career average) section. In this, you'll earn an index-linked pension at a rate of 1/80 of your pensionable pay for each year in the scheme, adjusted for inflation, plus a lump sum of three times the pension. Index linking of pensions in payment is capped, though this would only be significant if inflation were to become high.

That said, in the not too distant future the USS will be changing to become a 'hybrid' scheme, which both old and new members will be transferring into. In this, pensionable pay up to a given amount (something like £55K - I'm not sure the precise number is set in stone yet) will earn CARE benefits similar to those earned under the current CARE section; any pension contributions on pay in excess of that will then go into a pretty generous DC (defined contribution) offering instead (a DC pension is one where you have your own investment 'pot' rather than a fixed set of benefits with the scheme).

There's been a lot of fuss about the upcoming changes to the USS, but as a new member I wouldn't bother worrying about them - the main cause of the aggro has been the fact that when the current CARE section was introduced in 2011, the old 'final salary' section remained open for people already in it, but this time around they are moving into the revised scheme like everyone else.

xylophone

http://www.uss.co.uk/Factsheet%20List/Factsheet%2026-%20Salary%20Sacrifice%20FS.pdf
may be of interest.

wallofbeans

It's this bit that worries me:

"Refund restriction

When a member, who has been in a salary sacrifice
arrangement for ordinary USS contributions, leaves USS
with less than two years’ qualifying service, any refund
payable would not include those contributions paid by
the employer under the salary sacrifice arrangement.
In practice that may result in a very small refund being
available or none at all."

Does that mean if I don't stay in the job for more than two years I lose all the money that I've paid in? I'm a confused novice to how pensions work. I've not had any money to put away before!

somethingcorporate

No, it means the employers contributions will not be given to you.

Any money you put in will be refunded (less tax and NI though).

jem16

somethingcorporate wrote: »

No, it means the employers contributions will not be given to you.

That's the whole point though. With a salary sacrifice scheme it is the employer's contributions and you don't make any.

So yes there could be nothing to get back. However there should be the option to transfer.

"Transfer benefits to another pension scheme

However long you have been a member you can transfer the value of your benefits to another pension scheme in the UK and in many cases overseas. The calculation, whether or not you have more than 2 years’ membership, is based on the full value of your benefits."

A transfer is always better than a refund as you do get the employer's contributions.

wallofbeans

Could I transfer to my own choice of pension scheme then? I'm just thinking if I left and went back to full time freelance for some reason..

And how would doing that before 2 years and after affect how much I get?

jem16

wallofbeans wrote: »

Could I transfer to my own choice of pension scheme then? I'm just thinking if I left and went back to full time freelance for some reason..

You could but usually leaving it deferred is a better idea as it's usually worth more.

Transferring if less than 2 years service is sensible as you would lose the lot otherwise in a salary sacrifice scheme.

And how would doing that before 2 years and after affect how much I get?

No it would not matter.

http://www.uss.co.uk/SchemeGuide/CareerRevaluedBenefitssection/leavingthescheme/transferout/Pages/default.aspx

wallofbeans

So I could just leave it where it was? And then have it when retirement hits?

Sorry for all the probably obvious questions. I'm totally new to the whole idea of pension schemes...

jem16 wrote: »

You could but usually leaving it deferred is a better idea as it's usually worth more.

hyubh

wallofbeans wrote: »

So I could just leave it where it was? And then have it when retirement hits?

That would be a 'deferred' or 'preserved' pension. Like most DB schemes the USS has a 'vesting period', before which a deferred pension isn't an option, and conversely, after which a refund isn't possible. This happens to be two years (again, quite common).