Negotiating early retirement/voluntary severance

atush

The "X-factor" I'd need to consider therefore is whether applying the remaining £22k (rather than taking as taxable cash) to my USS pension would make up the difference between what I'd get if I paid into USS for one more year (i.e., from working 0.6FTE).

Consider also paying into a DC pension (the 22K would become 27.5K) and then you could increase the period before you draw your DB pension reduced.

If this is better or not than buying the added pension (which is then reduced by taking early) will be clear once you have the relevant figures.

dunroving

atush wrote: »

Consider also paying into a DC pension (the 22K would become 27.5K) and then you could increase the period before you draw your DB pension reduced.

If this is better or not than buying the added pension (which is then reduced by taking early) will be clear once you have the relevant figures.

The 22k is a taxable amount so if I'm understanding correctly, it would be £22k that would end up in DC pension. The university will not allow me to put it into the DC section of USS, only the DB section. I am not sure exactly why, but they/USS don't have to let me use any of it directly for pension as far as I know so the only way to put it into DC would be if I took the cash (and paid tax on it), and paid it into a SIPP or similar then got the HMRC top-up to £22k..

I am currently thinking to use it for additional DB pension, but to defer taking the pension for one year. Essentially I think that pension-wise I'm probably then looking at a very similar scenario to what I'd have if I worked P-T for a year and then retired. So it's looking more and more like a no-brainer decision. The $30k tax-free element of the VS settlement will pay for living expenses during the year so I don't really need to start taking the pension this September.

atush

you take the 22K, pay tax, then put it back into a DC pension. So it would be only 22K in that instance. But you wold get your tax back, and could use this money after you turn 55 to live on.

You could put in additional money if you have savings to spare and it is within your annual allowance (or carry forward from previous years)