USS Deferred Pension

Keddy

I have a couple of questions which I'm hoping someone can help me with.

I have benefits in the USS DB schemes. Some of these benefits were accrued pre October 2011 with a USS retirement age of 60 (ie they were bought using age 60 factors). Others have accrued post October 2011 with the current retirement age of 65. From October 2020, the retirement age will change in line with the State pension Age to 66.

1. If I remain an active member, does USS give actuarial increases for late retirements ie do my pre Oct 2011 benefits actuarially increase for later retirement if I don't retire at age 60 and will the benefits accrued between October 2011 and October 2020 increase actuarially for later retirement if I don't retire at age 65?

2. If I defer my benefits in USS, does the actuarial increase apply in addition to the standard inflationary increases?

Keddy

[FONT=Calibri, Helvetica, sans-serif]I've looked through the USS scheme rules. As far as I understand, pre 2011 benefits would increase actuarially if they are not drawn until after the NPA that applied at the time they were bought (in my case after age 60), and [/FONT]regardless of whether I am an active member or a deferred member.

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[FONT=&quot] It would be much appreciated if any experts out there could provide independent confirmation of this as the scheme rules are difficult to fathom and I may be misinterpreting them.
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xylophone

You can download "Leaving the Scheme" here.

https://www.uss.co.uk/members/members-home/leaving-the-scheme

bmtney54

I find myself in a position similar to the one I suspect faced by the OP. My USS deferred pension earned in the 1980's and frozen when I left the University sector is due to be paid at age 60 (mid-2018).

I rejoined the University sector c4 years ago and joined the 'new' USS pension scheme, which has a NRA of 65 (in 2023 for me). So I now have 2 (separate) USS 'folders' (pensions).

I have been told (by USS) that in order to draw my 'first' pension, I will have to leave my job - ie it can't be paid whilst I remain an employee in the University sector. I could elect to remain employed and postpone drawing the 'first' pension until my (pension 2) NRA (currently 65 but moving in line with state NRA - to 66) - effectively foregoing 5-6 years worth of pension, which is due to me. This would increase (in line with usual inflation linked increases) whether I draw it or not. So effectively, it will cost me to remain employed in the sector. If I leave (to shelf-stack in Asda or similar), I would be able to draw my first pension AND earn a salary too and be better off.

This seems inequitable to me. I feel like I am being forced out of HE, continuing to work in the sector will effectively be costing me. Plus I have to find another job - which aged almost 60 will not be easy.

kidmugsy

bmtney54 wrote: »

I have been told (by USS) that in order to draw my 'first' pension, I will have to leave my job - ie it can't be paid whilst I remain an employee in the University sector.

Surely that's wrong? You could just move to a university that uses the Teachers' Pension Scheme. I don't see how USS could avoid paying you your pension at 60 then, because you would no longer be eligible to be a member of USS.

God knows what the rules are now, but it used to be that if you worked on past 65 - e.g.in an institution with a retirement age of 67 - your USS pension would be raised by 6% for every year after 65.

bmtney54

I was given the information (about not being able to draw pension 1 whilst still being employed at the University) both in an email and this was confirmed verbally in a follow up telephone conversation (I too could not believe it!!).

One of the problems is that you are dealing with USS rules which appear to change and which are not accessible to members (at least in a form that are understandable). I am still not convinced the information I have been given is correct, but if anyone has any ideas who to turn to for advice (please not an independent FA!), I'd be grateful.

hyubh

bmtney54 wrote: »

I was given the information (about not being able to draw pension 1 whilst still being employed at the University) both in an email and this was confirmed verbally in a follow up telephone conversation (I too could not believe it!!).

Not being able to draw a final salary pension while being eligible to be an active member of the scheme was (is) the norm.

That said, the way you express things is ambiguous, and doesn't seem to appreciate the distinctions made by others on this thread:

• You say 'whilst still being employed at the University' - is this a university which offers the USS? If yes, then I wouldn't be particularly surprised at the need to leave employment first. If no, then get clarification for why.
• Keddy's original questions clearly go for you too, however you appear to have just assumed the answer to the first is negative (or didn't understand it). An 'actuarial increase' is where the scheme increases your pension entitlement while you leave it deferred after normal retirement age, to reflect the fact the scheme will likely end up having less years to pay it. Typically the idea is that an increased pension paid out late will cost the scheme the same as the original pension paid out normally. However, it doesn't have to be (and a scheme doesn't have to give late retirement increases in the first place).

One of the problems is that you are dealing with USS rules which appear to change and which are not accessible to members

They are publicly available on the USS website, and have been for many years - here's the current link:

https://www.uss.co.uk/members/members-home/resources/annual-reports-and-scheme-rules

(at least in a form that are understandable)

While I'd agree they aren't nice to read, they are the definitive statement of what's what in the scheme. And the site has factsheets as well. From the 'retirement' one:

Late retirement
You may remain in service after the Scheme’s NPA.
If you cease contributions at your NPA, on your retirement you will receive your benefits earned up to NPA and increased for each complete month from your NPA to your actual date of retirement.

The increases are currently:

If you reached NPA before 1 April 2016
• 0.5% per month for each month from NPA up to 31 March 2016; and
• 0.35% per month for each month since 1 April 2016

If you reach NPA on or after 1 April 2016
• 0.35% per month for each month from NPA

Please note, rates are current at time of print but are subject to review and could change in future.

https://www.uss.co.uk/~/media/document-libraries/uss/member/factsheets/retirement.pdf

Would be worth checking with the administrator that the whole of your pension would get these increases, together with Keddy's second question about whether they come on top of standard increases for inflation.

bmtney54

Many thanks hyubh both for the links to the scheme rules and for the guidance.

Awaiting advice from the scheme and from employer who seem equally unclear (or just very busy) given the delay in responding, as to how this will unravel. But you're right about one thing - the scheme rules (probably necessarily) are not light reading nor written for laymen to understand.

Will update as things become clearer - hopefully to help others in a similar position.

System

My understanding is that with the pre-October 2011 pension, you can retire at 60 (rather than 65) without any actuarial reduction, but there is no actuarial increase if you carry on working after 60 until you reach 65. It seems reasonable that to receive your USS pension you have to retire! You can check your USS pension at various retirement ages at https://www.uss.co.uk/members/members-home/resources/modelling-and-illustration-tools

Southend1

I think it depends on your contractual normal retirement date. I have pre-2011 service but normal retirement for me is 65 for that.