USS

NTFI19081

Hi, Anyone know anything about USS? I am having a hard time planning a definite retirement date. I am 50, and have around 23k + lump sum of 69k accrued in USS. I plan to retire at 60, and as I have been a member pre-2011, I won't suffer much of a reduction by taking pension at 60, rather than the NPA of 66 (pegged to state pension age). It will be 67 by the time I retire. What I cannot work out is how likely it is that I will be allowed to retire at 60 if I wish. The USS seem to say that I need my employers permission, which leads me to think that my goal of 60 is far from guaranteed. Any thoughts much appreciated!

Johnnyboy11

You can retire from age 55, no Employer permission required, but on a reduced pension as you will likely receive the benefits for longer. It's also possible to retire earlier due to ill health or if you are made redundant after age 50.

NTFI19081

Really, it says employer permission on the website? I hope so

slithy_tove

I recommend that you familiarise yourself with the USS website for members, especially the comprehensive set of modelling tools at h-ttps://www.uss.co.uk/for-members/calculate-your-benefits. I found these invaluable in planning my own early retirement from the university.
You do not need your employer's permission to retire. But your pension will be actuarially reduced to compensate for the longer period you will be receiving it for. The benefits modeller above will tell you exactly how much. With a NPA of 65 taking benefits at 60 will yield a reduction of 16%, from 66 to 60 it's 18.7%.  The benefits you accrued prior to 2016 will attract the lower reduction, as the increase in NPA applies to benefits accrued following the change..
(There was a provision for members who were over 55 before 2011 to retire without reduction, but the employer had to agree to make up the contributions, I believe. But you will not benefit, given the circumstances you have posted.).

hyubh

NTFI19081 said:

Really, it says employer permission on the website?

This page certainly doesn't: https://www.uss.co.uk/for-members/thinking-about-your-future/understanding-your-options/your-options-at-different-ages-and-stages. Are you conflating early retirement (from 55) with flexible retirement (= draw pension while still employed)...?

Jack's_mum

Only benefits accrued before 1st October 2011 can be taken at age 60 with employer's consent assuming you are currently employed in a USS institution. I think the rules state that the employer's consent should not be "unreasonably withheld" and I assume but am not certain that there is no charge to the employer for this. Anything accrued after 1st October 2011 will be actuarially reduced at about 4% per year if taken before the retirement age that existed during the year the contribution was made. This is currently 65 but will rise to 66 soon. Because of all the changes in USS over the last 10 years, the information about the age 60 option is not very clear on the USS website. These rules apply to both flexible and normal retirement I understand.

NTFI19081

Thanks everyone. I dug out the rules. 

13.2 Pre-1 April 2016 rules Sub-rules 11.2.3 (Early retirement at or over age 60 subject to employer consent, not to be unreasonably withheld) and 11.4 (Adjustments to transferred-in service) of the rules of the scheme as they stood on 31 March 2016 shall continue to apply to those members who then fell within their terms. Sub-rule 11.2.1 of the rules of the scheme as they stood on 31 March 2016 shall continue to apply to those members who then fell within their terms, but only to the extent that they provide entitlement to benefits from the day after the date of retirement; the calculation of those benefits shall be governed by these rules. The definition of “redundancy” contained at sub-rule 1.1 of the rules of the scheme as they stood on 31 March 2016 shall apply for the purposes of this rule.

I think it all hinges on how you interpret 'not to be unreasonably upheld'. It would see unfair when the NPA is moving to 67 for me, for my employer to deny me an  reduced pension at  60? My concern is that I am aware that there is a payment required of my employer of 5k for every year I leave before 65 due to an LGPS transfer in many years ago. Not sure that is grounds to withhold consent. 

slithy_tove

Jack's_mum: The USS appear to have changed the early retirement factors, and the reduction is now closer to 3.2%.  I discovered this rather substantial change when comparing the projections USS prepared for me in 2019 and 2020.  You can see the table at (please unmunge the URL) h-ttps://www.uss.co.uk/-/media/project/ussmainsite/files/financial-advisers/mfuss-for-ifa.pdf.

I assume the change is because of lower actuarial assumptions of future pension increases into the future. Curious that this substantial change appears to have snuck in unannounced to members. 

ffacoffipawb

slithy_tove said:

Jack's_mum: The USS appear to have changed the early retirement factors, and the reduction is now closer to 3.2%.  I discovered this rather substantial change when comparing the projections USS prepared for me in 2019 and 2020.  You can see the table at (please unmunge the URL) h-ttps://www.uss.co.uk/-/media/project/ussmainsite/files/financial-advisers/mfuss-for-ifa.pdf.

I assume the change is because of lower actuarial assumptions of future pension increases into the future. Curious that this substantial change appears to have snuck in unannounced to members. 

It is in the members' favour so not as important as advising something that does the opposite I guess.

slithy_tove

OP.  I have a further suggestion.  When you have used the USS modellers to predict your pension at 60, you may find that you want to consider topping it up with additional contributions.  This could be done either within the USS "Investment Builder" (the USS' defined contribution component) or a separate private pension, eg a SIPP.  There are two advantages to contributing within the USS

1. The USS will pay all the investment manager charges on your chosen funds.
2. In addition to the regular means of accessing DC pension funds, you can use the funds to generate a lump sum, and at the same time commute your DB pension lump sum into income.  The commutation rate is about 23.5 so £23.50 of DC savings will buy £1 of income per year, index-linked for the rest of your life. This is noticeably better than any annuity you could buy. (Again the USS website "benefit conversion modeller" will help you work this out for your own numbers.)
   

Of course to invest in the USS would be putting all your pension eggs in a single basket, and you might worry about risks to the fund, which currently has a model deficit of £17.9BN.....

NTFI19081

Slithy > I am already very aggressively saving in the Inv Builder + SIPP and have around 70k so far.  I am working to secure a 'just in case they don't let me retire at 60' bridge in the DC pensions i.e. I could live off that until NPA. However, if I could be confident of retiring in USS at 60 then I wouldn't need to.