SAUL vs USS

Emily1971

Hello, this has been asked before but not recently so times have changed!

I work for a UK university. I am currently with SAUL but have been promoted, and could be automatically changed to USS unless I tell them that I would like to remain with SAUL.

I'm not sure what to do. I am 46, so 20 years or so from retirement. I am hoping that my career will progress and that I will increase my level at the university.

I don't know much about pensions, I have just always paid in without really thinking about it, so having to make a choice like this is difficult.

Tealblue

SAUL have excellent customer service and will have met this question before. They should be able to give you a comparison of the differences between the schemes.

What they can't do is tell you whether or not switching to USS would be in your interests - that's classed as 'advice' - but clear information should be enough to help you take your own decision.

Brynsam

SAUL underwent major changes in 2016, including leaving the public sector transfer club and changing from being a final salary scheme to a career average scheme.

These are quite tricky things to get your head round and you might find it helpful to give TPAS a call (https://www.pensionsadvisoryservice.org.uk) and they can help you to understand these. Usual caveat - they can't give advice, but can give you clear info which will help you to take a view. Free and impartial - they won't try to sell you anything.

hyubh

Emily1971 wrote: »

I am currently with SAUL but have been promoted, and could be automatically changed to USS unless I tell them that I would like to remain with SAUL.

I'm not sure what to do. I am 46, so 20 years or so from retirement. I am hoping that my career will progress and that I will increase my level at the university.

SAUL, currently at least, remains fully DB (1/75 CARE), whereas the USS... obviously had all those strikes recently about a plan to move to fully DC. The fact you're looking to make further career progression is really irrelevant - neither of the two schemes are still 'final salary', and even if you have pre-16 service with SAUL, your 'final pensionable pay' has already been calculated for it.

When are you looking to retire? Earlier than state pension age, and a decent DC scheme may potentially be attractive, assuming you've already been in SAUL for many years. If neither hold I would personally be strongly inclined to stick with SAUL.

kidmugsy

In your shoes, OP, I'd find out how late I can delay a decision and also whether I can reverse it.

bluenose1

I am in USS and an independent review going on (after lots of strike action) to decide if it can remain DB scheme.
The strike was because members wanted the continued security of a DB scheme whereas the official advise is it has to become a DC scheme.

I know with USS I can make additional contributions and get salary sacrifice. May be worth checking if rules are the same.

It was only in the last year I had a pension lightbulb moment and realised how much tax and NI I could save if I increased my pension contributions. For every additional £68 I lose from my salary a £100 is put in my pension.

kidmugsy

bluenose1 wrote: »

For every additional £68 I lose from my salary a £100 is put in my pension.

That's especially valuable if it were to let you retire early and draw out that £100 tax-free. But even if not you could look at it this way:

£25 comes out tax-free. If you assume that everything will have kept up with inflation - both the pension money and the £68 you would otherwise have retained - then the cost to you is £68 less £25 = £43. That has left you with a fund of £75 which will be taxable at 20% if tax rates stay the same. £75 x 0.8 = £60 which is 40% bigger than £43 it cost you.

bluenose1

kidmugsy wrote: »

That's especially valuable if it were to let you retire early and draw out that £100 tax-free. But even if not you could look at it this way:

£25 comes out tax-free. If you assume that everything will have kept up with inflation - both the pension money and the £68 you would otherwise have retained - then the cost to you is £68 less £25 = £43. That has left you with a fund of £75 which will be taxable at 20% if tax rates stay the same. £75 x 0.8 = £60 which is 40% bigger than £43 it cost you.

Many thanks, even better than I thought. I am in the lucky position that I may be able to afford to go from 55 onwards, though we own a couple of properties so conscious that the income from them will mean I haven't got much left to reduce my tax liability. Good to know the minimum I should get back is 40%.
Am going to look into transferring the house income split all into my oh name for tax purposes. He will stay just below the upper tax limit.
Hoping this will leave me free to drawdown my DC savings tax free.