USS Investment Builder

Simes122

gundo said:

bluenose1

Didn’t think you could still put in AVCs. Do you get salary Sacrifice for them? If not do you get them for your DB pot? Just thinking of best way for you to maximise return.

Yes you can still put in AVCs. They'll go into the DC Investment Builder scheme. I'm leaving the DB part of the USS scheme alone until I'm 67 to maximise its value (it won't be worth that much). AVCs go in via salary sacrifice so that saves me NI, income tax and my employer pays all the management fees for the Investment Builder scheme. So IMHO it's better than a SIPP because I assume they're better at managing the money than me and the fact that it's salary sacrifice. I will still have a SIPP so I can shelter as much of my windfall from tax as possible. This month will be my first month on minimum salary. I looked at my payslip today and it's working out as I expected. In my own spreadsheet I'd even managed to calculate the new income tax and NI deductions correctly (I'm easily pleased).

Have you checked the early retirement factors with USS?  I can’t see the point in not taking the USS RB part early - the breakeven point appears to be well into my 90s before being worse off from taking it early at age 57, because of the years of income before NRD.  I’m not there yet, but the ERF appear pretty generous.

gundo

Simes122 said

Have you checked the early retirement factors with USS?  I can’t see the point in not taking the USS RB part early - the breakeven point appears to be well into my 90s before being worse off from taking it early at age 57, because of the years of income before NRD.  I’m not there yet, but the ERF appear pretty generous.

I've only got 5.5 years in the scheme and if I stop working at 60 this gives me just under 10 years service. So it won't be worth much. You're right, perhaps the increase will be so small I may as well take the DB portion then.

Simes122

gundo said:

Simes122 said

Have you checked the early retirement factors with USS?  I can’t see the point in not taking the USS RB part early - the breakeven point appears to be well into my 90s before being worse off from taking it early at age 57, because of the years of income before NRD.  I’m not there yet, but the ERF appear pretty generous.

I've only got 5.5 years in the scheme and if I stop working at 60 this gives me just under 10 years service. So it won't be worth much. You're right, perhaps the increase will be so small I may as well take the DB portion then.

It’s not so much the length of service, the ERFs are based on how early you retire.  Yours would I think be .813.  (6 years early). (Table is here  https://www.uss.co.uk/financial-advisers ) I’ve a similar length of service to you but am going 9 years early.  Let’s say you drop from a notional 5k to 4K.  At around 0.8.  You get 6 x 4K you’d not have had if you’d waited.  So you are £24k plus up.  You hit 67 and now you are £1k down a year for the rest of your life because you took it early.  You are age 91 at least before you pass the point your taking your dB early cost you anything!   Obviously need to work with your own figures, but it doesn’t seem worth not taking it early.

gundo

Simes122 said:

gundo said:

Simes122 said

Have you checked the early retirement factors with USS?  I can’t see the point in not taking the USS RB part early - the breakeven point appears to be well into my 90s before being worse off from taking it early at age 57, because of the years of income before NRD.  I’m not there yet, but the ERF appear pretty generous.

I've only got 5.5 years in the scheme and if I stop working at 60 this gives me just under 10 years service. So it won't be worth much. You're right, perhaps the increase will be so small I may as well take the DB portion then.

It’s not so much the length of service, the ERFs are based on how early you retire.  Yours would I think be .813.  (6 years early). (Table is here  https://www.uss.co.uk/financial-advisers ) I’ve a similar length of service to you but am going 9 years early.  Let’s say you drop from a notional 5k to 4K.  At around 0.8.  You get 6 x 4K you’d not have had if you’d waited.  So you are £24k plus up.  You hit 67 and now you are £1k down a year for the rest of your life because you took it early.  You are age 91 at least before you pass the point your taking your dB early cost you anything!   Obviously need to work with your own figures, but it doesn’t seem worth not taking it early.

Thank you so much, I hadn't thought about it in that way. Hmm... Interesting. Definitely food for thought.

taka

The financial advisers pdf linked to above also explains what happens to DB accrued under the different rules over the years with respect to the ERF. Different historical parts of the scheme have different ages as to when the pension can be taken without reduction.

Johnnyboy11

Starting your pension early also means you have your full personal allowance to offset any Income Tax that might otherwise be payable if you wait until NRA. This makes an early pension start even more lucrative.