USS DB Transfers

Aminatidi

I was going through some old paperwork and stumbled on my USS statement when I used to be in that scheme some years ago.

I'm in my early 40's and according to my statement from 4 years ago when I left my pre-October 2011 pension is £2568 p/a and my post-October 2011 pension is £1851 p/a.

If I put those numbers into the USS modeller it shows a lump sum of £24K with a pension of £8100 and a spouses pension of £4000 based on inflation at 2.5% p/a.

I'm not married and don't have a partner so for the moment I've basically only got myself to think of.

What triggered my checking of paperwork was a newspaper article this week about the USS scheme apparently being in some difficulty.

I appreciate nobody here can give detailed advice but I figure no harm giving the rough numbers as otherwise it's pretty meaningless.

Should I be looking at whether a transfer to a SIPP would make sense?

hyubh

If I put those numbers into the USS modeller it shows a lump sum of £24K with a pension of £8100 and a spouses pension of £4000 based on inflation at 2.5% p/a.

I don't think the modeller provides much help to be honest. Benefits from your pre-Oct 11 service 'revalue' each year by CPI (technically: the inflation-proofing measure that public sector schemes use for deferred and in payment benefits), for benefits arising from membership from Oct 11 onwards, the same up to 5%, then if CPI is higher, 5% + half the additional increase, with the overall increase capped to 10%.

So, if inflation is assumed to run at 2.5%, then you are under the cap for post-11 service and your pension in retirement is - in real terms - exactly the same as it is now, in deferment.

What triggered my checking of paperwork was a newspaper article this week about the USS scheme apparently being in some difficulty.

This is a debate about the costs of an open, 'private sector' DB scheme, and ultimately, about the merits of the scheme further reducing (or even closing) future DB accrual as a way to manage costs. No side thinks the USS will any time soon run out of money to pay existing pension promises.

I appreciate nobody here can give detailed advice but I figure no harm giving the rough numbers as otherwise it's pretty meaningless.

It's pretty meaningless still though without a CETV figure, however as I'd imagine that figure will be way over £30K, you will need to take independent financial advice by law before actually transferring out.

Aminatidi

Thank you, would anyone care to guess at what sort of CETV USS may be offering at the moment?

I don't know if these are 100% unique per individual or if there is a rule of thumb that can be applied.

hyubh

Aminatidi wrote: »

Thank you, would anyone care to guess at what sort of CETV USS may be offering at the moment?

I don't know if these are 100% unique per individual or if there is a rule of thumb that can be applied.

The scheme actuary will use for all the same methodology and set of factors agreed with the trustees (obviously someone older will have different factors than someone younger, however the factor tables will be common), though this will likely be pretty complicated and revised from time to time.

Under covering pension legislation, you have the right to one free CETV quotation a year, up until a year before your normal pension age in the scheme (at which point the statutory right to a transfer out disappears, though schemes can still do transfers out if they want to [the USS specifically does not mind]). Getting a quotation doesn't mean you have to proceed, though the figure will be valid for 3 months:

https://www.uss.co.uk/~/media/document-libraries/uss/forms/uss_transfer-option.pdf

Aminatidi

Thank you, I meant more does anyone have any idea what kind of multiples current values are?

You look online and whilst not specific to USS you see some (to me) crazy numbers mentioned.

xylophone

I don't know if these are 100% unique per individual or if there is a rule of thumb that can be applied.

It is an individual quotation based on your situation.

A guide to
your options once you have left USS

You can request a quote for a transfer from either the
USS Investment Builder, the USS Retirement Income
Builder, or both sections at the same time. The amount
of your transfer value will be the actuarial value at the
date of calculation of your benefits, no matter how
much qualifying service you have accrued. If you would
like a quotation, please complete the form included
with your deferred benefit statement. Alternatively, you
should ask the person responsible for pensions at your
institution to obtain a quotation for you from USS. You
will be advised by USS of the amount of the transfer
value which can be made available.

xylophone

You look online and whilst not specific to USS you see some (to me) crazy numbers mentioned.

These tend to be from private sector schemes.

That said, your CETV is likely to be far in excess of £30,000 and if so, before a transfer out to a non DB Scheme you would have to obtain the advice of a Pension Transfer Specialist.

https://www.pruadviser.co.uk/knowledge-literature/knowledge-library/pension-transfers-conversions/

This person's advice will be expensive and might not be positive - if you are likely to wish to transfer against advice, you would be well advised to confirm with the PTA before engaging him that regardless of whether or not his recommendation was positive, he would still provide


a written statement confirming all of the following:


They have provided financial advice to the individual on the proposed transaction.
They have the appropriate permissions to carry out the transaction.
The adviser's FCA registration number to carry out the transaction.
The individual's name and the name of the scheme in which they have the safeguarded benefits.

on the basis that

The adviser does not necessarily have to agree with the proposed transaction to provide this confirmation. They are simply confirming that they have provided advice on the proposed transaction to the individual.

And bear in mind with regard to receiving scheme see

https://www.pruadviser.co.uk/knowledge-literature/knowledge-library/transfer-pension-scheme/

"However, although most schemes provide the right to transfer, not every scheme has to accept an incoming transfer.

A stakeholder pension scheme is currently the only type of scheme which must accept any transfer from another registered pension scheme."

hyubh

Aminatidi wrote: »

Thank you, I meant more does anyone have any idea what kind of multiples current values are?

You look online and whilst not specific to USS you see some (to me) crazy numbers mentioned.

Here you go, poster on this very board a couple of years ago (bit about the LGPS TV in is irrelevant for the CETV calculation):

I have a USS pension which is a DB scheme, I used to be in an LGPS scheme which was transferred into USS about 12 years ago. I have just got a CETV at the age of 47. Current annual pension is £11,753, lump sum is £35,260. They have given me a CETV of £253,328

So that is just over 18.5 times

https://forums.moneysavingexpert.com/showpost.php?p=72892007&postcount=11

That said, the USS website also says they do 'non-guaranteed' CETVs with a quicker turnaround to the proper guaranteed ones, so might be an idea to get one of those:

https://www.uss.co.uk/ifas/ifas-home/what-uss-will-provide

NedS

Before you get too excited, I have had independent financial advice a number of times regarding transferring DB pension schemes into my SIPP, including my USS scheme (each with transfer values above £30K), and on every occasion they have advised against it and my SIPP provider has refused to act against the advice and refused to accept my transfer value.
I left the USS scheme when I was 35 and feel that with only CPI inflation protection over a 30 year period, my pot's value has been substantially eroded during deferment. I am pretty sure I could have beaten an average 2.5% return over 30 years yet I have been refused the opportunity to substantially grow my investment.

xylophone

yet I have been refused the opportunity to substantially grow my investment.

You did have regulated advice from a PTS and he did provide the statement to which reference is made above?

The requirement is that you take advice, not necessarily follow it.

That said, your particular SIPP provider would not accept a transfer unless you could demonstrate that the advice you received was positive.

https://www.telegraph.co.uk/pensions-retirement/financial-planning/i-was-forced-to-waste-1k-on-advice-when-all-i-wanted-was-to-move1/

According to https://www.pruadviser.co.uk/knowledge-literature/knowledge-library/transfer-pension-scheme/

However, although most schemes provide the right to transfer, not every scheme has to accept an incoming transfer.

A stakeholder pension scheme is currently the only type of scheme which must accept any transfer from another registered pension scheme.

Presumably, then, it would be possible to transfer first to a stakeholder and after that to a personal pension of some type?

hyubh

NedS wrote: »

I left the USS scheme when I was 35 and feel that with only CPI inflation protection over a 30 year period, my pot's value

At the risk of sounding pedantic (but it isn't really) - being a DB scheme, you have no 'pot', but a promised income from a certain age.

has been substantially eroded during deferment.

How is a pension staying the same in real terms 'substantially eroded'...?

I am pretty sure I could have beaten an average 2.5% return over 30 years yet I have been refused the opportunity to substantially grow my investment.

A DB pension doesn't have a 'return', and isn't an investment. The size of the CETV reflected the guarantee, i.e. if there weren't the guarantee, or much less of one (universities as a group - which is what they are in the USS - have a very strong covenant), then the CETV would have been much lower in the first place.