USS Investment Builder

NTFI19081

Hi, I am quite an aggressive pension saver. I am in USS, but tend to pay additional contributions into a SIPP. Apart from fees, would paying into into the Investment Builder give me more options are retirement? Any views appreciated.

Marcon

NTFI19081 said:

Hi, I am quite an aggressive pension saver. I am in USS, but tend to pay additional contributions into a SIPP. Apart from fees, would paying into into the Investment Builder give me more options are retirement? Any views appreciated.

There's a very clear explanation of what you can do with the Investment Builder part of your pot: https://www.uss.co.uk/for-members/your-pension-explained/investment-builder/using-your-investment-builder-pot

The only further 'option' you get with the IB is the choice of buying an annuity within USS - and whether the rates are competitive with annuities you could buy externally would only be known at the point you come to buy your annuity.

ussdave

You should check if you can pay into the IB by salary sacrifice.  If you can that will be much more tax efficient than paying into a SIPP.

grumiofoundation

In addition to above. Can you make additional contributions via salary sacrifice ? And if so how much (for example I am limited to 1% that will get Sal sac). Would therefore save NI vs paying into SIPP. 

The (lack of) investment charges for USS members is quite attractive, employer subsidises so (I think for all?) the investment options you don’t pay any charges. 

NTFI19081

Thanks, I was under the impression there might be more flexibility with Tx free cash/switching cash for income

ussdave

grumiofoundation said:

In addition to above. Can you make additional contributions via salary sacrifice ? And if so how much (for example I am limited to 1% that will get Sal sac). Would therefore save NI vs paying into SIPP. 

The (lack of) investment charges for USS members is quite attractive, employer subsidises so (I think for all?) the investment options you don’t pay any charges. 

I think there are limited charges for some funds, but they are still subsidised.  E.g. emerging markets

kidmugsy

NTFI19081 said:

Thanks, I was under the impression there might be more flexibility with Tx free cash/switching cash for income

The link Macron provided yields this:
...  you can take your pot at the same time as your Retirement Income Builder benefits, you may be able to take up to 100% of your pot as tax-free cash – this will depend on the size of your pot and the value of your Retirement Income Builder benefits. You may instead choose to use your pot to increase your monthly income from the Retirement Income Builder.

bluenose1

I save aggressively into my USS investment builder to maximise benefits of salary sacrificer. One of the things I don't like is that you can't withdraw just the 25% tax free when 55. You have to withdraw 25% tax free and 75% taxable. Therefore restricting future pension DC contributions to £4k per annum.

ussdave

My solution to the above problem is to transfer out the balance of the IB pot at some point.  My plan is to time it so that I can still fill it back up to the point where I maximise tax free cash at the point of drawing the RB and IB pots...and to use the amount I've transferred into a SIPP to live off for a few years, allowing me to reduce early retirement factors.

bluenose1

ussdave said:

My solution to the above problem is to transfer out the balance of the IB pot at some point.  My plan is to time it so that I can still fill it back up to the point where I maximise tax free cash at the point of drawing the RB and IB pots...and to use the amount I've transferred into a SIPP to live off for a few years, allowing me to reduce early retirement factors.

Good idea, thanks, never thought of that. Do you know if you can transfer part of your IB pot out whilst you are still contributing?
I want to keep 5 years in cash and the interest USS pay for cash or as they call it the liquidity fund is currently  0.8% which isn’t bad compared to my HL SIPP of 0%.

ussdave

bluenose1 said:

ussdave said:

My solution to the above problem is to transfer out the balance of the IB pot at some point.  My plan is to time it so that I can still fill it back up to the point where I maximise tax free cash at the point of drawing the RB and IB pots...and to use the amount I've transferred into a SIPP to live off for a few years, allowing me to reduce early retirement factors.

Good idea, thanks, never thought of that. Do you know if you can transfer part of your IB pot out whilst you are still contributing?
I want to keep 5 years in cash and the interest USS pay for cash or as they call it the liquidity fund is currently  0.8% which isn’t bad compared to my HL SIPP of 0%.

Unfortunately it's all or nothing - you have to transfer your full IB balance.  You can continue contributing as normal after a transfer out though.

I didn't know that about the cash interest.  As you say, that's quite decent.