USS - General discussion

PJM_62

Great idea !

uss_tish

Hi everyone, yes I am still here and pop on from time to time but can see that the discussion has moved on from my original question. I'm more than happy to change the title of the thread as it has broadened out to all things USS.

P.S I am very happy in retirement😊. Good luck and best wishes to those waiting to take the leap. 

FIREmenow

Thanks again! So glad you are enjoying retirement

RSTime

And just as a note of warning (in case you missed it in my separate post), USS do make calculation errors. I received a calculation for this July and there was clearly an error (from my previous estimates). The first person I spoke to at USS denied an error and said they would do an audit but did not get back to me after 2 weeks, I called again (nothing had been done) and the person I spoke to second time was extremely helpful and did a proper check (I sent them previous estimates) and discovered there was an error in their spreadsheet (to do with AVCs). I have received my updated estimate and quite a difference, my standard benefit has gone up by ~£5.5k per annum and lump sum up by ~£16.5k. All rather concerning that such an error is possible. Full post here if you are interested.

NickBFS

Well I never! I just received an email from the HR pension team at my institution drawing our attention to the fact that ERFs were changing in October for the worse with a link to  this page on the USS website and advising us to consider this carefully if planning to retire early. 
Good on them to communicate on this given the lack of communication from USS on this issue before this.

MPLMPL

NickBFS said:

Well I never! I just received an email from the HR pension team at my institution drawing our attention to the fact that ERFs were changing in October for the worse with a link to  this page on the USS website and advising us to consider this carefully if planning to retire early. 
Good on them to communicate on this given the lack of communication from USS on this issue before this.

Hmmm. My institution did the same, but I fear not necessarily out of a sense of duty or to look after their staff. Many colleagues read it as a (non too) subtle way of shedding some staff without the need to go through the poor optics (and cost) of a voluntary severance scheme, given that there is a current post freeze. Even offered a subtle hint that the standard 3 months notice may be negotiable given the proximity to 1st October. I'm with the cynics on this.

bluebirdy

Hello USS-ers,

My VS application has now been, in principle, accepted. I will also seek to draw my pension.

I now need the employer to agree retirement date as well as end of contract date for 30th Sept to benefit from max pay and the beneficial ERFs.

I will receive a VS payment, assuming we’re all happy with the settlement. They pay this AFTER end of contract. I was hoping to divert a chunk of the taxable part of this into the IB pot but that presumably won’t be possible if it is not paid till after retirement date?

Have others found a way to resolve this? Is the only answer to just make an extra lump sum payment from existing salary during notice period? I think this has a bit of lead in time also so might be tight.

Or maybe it won’t matter and I can just pay a chunk in later? However I’m conscious that there are pension recycling rules though, although I don’t yet understand them. 

Any advice/suggestions welcome.

PJM_62

Could you get a short-term loan and pay it back once you got your payout? 

NickBFS

Good on you for getting your VS application approved (mine was rejected   but I will be going anyway). Unless I am mistaken, I do not think that you can make direct payments into your USS pension so PJM-62's solution would only work up to the amount of your salaries still to be paid, although I suppose that a workaround would be to contribute to a SIPP and transfer it to USS but this might take too much time to be feasible in your situation. Even if feasible, transfer-ins do not benefit from the fees subsidy, so this begs the question of whether it would be worth doing anyway rather than investing in a separate SIPP.

Bear in mind too that only the taxable portion of the VS can be paid into a pension scheme, so the first £30K are not eligible.

NickBFS

On a tangent to bluebirdy's question, I also have some questions related to maximising pension contributions in the year of retirement.

I am retiring in September and want to contribute 100% of my salary this tax year to my pension. I do not expect to have any income (other than my pension) after retirement. Since April, I have been maximising my salary sacrifice contributions. However, since you are not allowed to salsac beyond the minimum wage, I can still contribute the salary that was paid to me to a pension. I won't be able to do it to USS (I did not want to get into the complication of asking my employer to contribute the maximum possible via salsac and then contribute the rest without salsac) so I will make a one-off contribution to a SIPP after retiring. 

I think that I know the answers to the questions below but wanted to double-check that I have not missed something so I would be grateful for confirmation that the following are correct: 

1) timing of contributions: as long as I do it in the current tax year (i.e. before 6 April 2025), that is fine as long as it is within the tax year even if I do not earn any qualifying income after September.

2) amount of contributions: AIUI, I can contribute 100% of my salary to my pension. If I take the amount on my payslip after salsac but before tax and NI contributions, this represents the additional amount that I can contribute to my pension. If I take away 20% of this to cover for income tax at basic rate (I will be a basic rate tax payer this year), this represents the amount that I can transfer to a SIPP.  Let us say for the sake of argument that my cumulative gross salary from April to September after salsac is GBP 10K. The amount I can put in a SIPP will be 8K (with 2K which will be added by the SIPP provider on behalf of HMRC to bring the total in the SIPP to 10K). In particular, I do not need to deduct NI contributions from the amount I pay into the SIPP.

3) which scheme to contribute to: there is no easy practical way to shift those amounts to USS while benefitting from the fees subsidy so the easiest way forward is to contribute this to a separate SIPP.

4) pension recycling: in addition to compulsory USS contributions, I have been contributing an extra 20% of my salary in AVCs for the last five years and have been substantially increasing this in the last 18 months or so. As long as the cumulative total of my extra pension contributions above the 20% AVCs baseline in the two previous tax years and the current tax year do not exceed 30% of the tax-free lump sum I will be receiving when I retire next September, I do not have to even begin to worry about pension recycling rules.