USS - General discussion

swindiff

This has come up before, am from what I remember it was a little vague and unclear, as you have probably found searching online.  However, if you got another role elsewhere and rejoined the USS then surely you become an active member again?

NTFI19081

swindiff said:

This has come up before, am from what I remember it was a little vague and unclear, as you have probably found searching online.  However, if you got another role elsewhere and rejoined the USS then surely you become an active member again?

Yes, very confusing, I will have to call USS. 

SoManyQuestions999

Hi all,
Given the flurry of voluntary redundancy schemes being announced across Universities across the UK, I don't suppose I am the only person trying to find out information about USS pensions in the context of redundancy. It is early days for me, so please bear with me as I try to work out my options. I have a few specific queries, but just for background - I am 55 and always thought I would work until at least 60, but this is making me reconsider. Would appreciate thoughts and ideas from anyone who is (or has recently been) going through the same thing.

The questions I have are very specific (and may be impossible to answer with more info) but here goes!

Our Uni guidelines say that the first £30k of the settlement can be paid tax free. Does anyone know what the tax of the remainder would be?

I'm also trying to work out how much of the leaver's payment I could pay into my USS Investment Builder? The Uni  guidelines say that I can do this, but with no detail. (In case its relevant, I'm in the 40% tax bracket and have been paying additional contributions with Salary Sac into the Inv Builder for a couple of years.) Would the amount I can pay in depend on rules within my own University, or USS rules, or tax rules?

I should add, I have asked these questions to my institution, but they are inundated and haven't yet replied. I've also been searching on the USS website, but while there is a lot of talk about "leaving USS" there isn't much about redundancy that I have found so far. (Incidentally, the uni is not using the language of "redundancy" itself, but "leavers" - I don't know if this is relevant...)

I'm going to a briefing about it tomorrow, but any tips of what questions I should be asking would be much appreciated... 

PJM_62

I'd be interested to hear the answers you get, as VSS for staff is likely looming at my uni.

Its worth giving USS a call. I've always found them really helpful when I've had questions (mostly about Flexible Retirement).

Sarahspangles

SoManyQuestions999 said:

I've also been searching on the USS website, but while there is a lot of talk about "leaving USS" there isn't much about redundancy that I have found so far. (Incidentally, the uni is not using the language of "redundancy" itself, but "leavers" - I don't know if this is relevant...)

 

Remember people aren’t redundant, posts are. I know it may not feel like that in some cases. I’d use the term ‘leavers’ as it also covers those accepting VR or SVER, if those are offered. In every restructuring I’ve done, there’s been at least one person secretly or not so secretly thrilled….

The ‘Cutting Tax’ board also has some traffic from people exploring the options on redundancy.

I’ve observed a few times that people have focussed on commencing their pension immediately - after all as employees we’re used to a monthly deposit in the account. Later they’ve commented they could have used savings to better advantage and paid less tax overall.

SoManyQuestions999

Thanks @Sarahspangles ... I'll see what I can find from the Cutting tax board, but not having much luck so far. The Uni tells me to talk to USS and USS tells me to talk to Uni. As I'm only 55 I don't want to start my pension too soon, as the ERFs mean I wouldn't get much. And yes, it is precisely re how to avoid paying too much 40% tax on the payment that I'm trying to working out.

Sarahspangles

SoManyQuestions999 said:

Thanks @Sarahspangles ... I'll see what I can find from the Cutting tax board, but not having much luck so far. The Uni tells me to talk to USS and USS tells me to talk to Uni. As I'm only 55 I don't want to start my pension too soon, as the ERFs mean I wouldn't get much. And yes, it is precisely re how to avoid paying too much 40% tax on the payment that I'm trying to working out.

With some pensions, the ERF is pitched so you get roughly the same amount paid out within average life expectancy as you would have if you had retired at normal pensionable age. It varies. But you lose the inflation proofing if that’s a strong point of the scheme you’re in.

Barralad77

SoManyQuestions999 said:

Hi all,
Given the flurry of voluntary redundancy schemes being announced across Universities across the UK, I don't suppose I am the only person trying to find out information about USS pensions in the context of redundancy. It is early days for me, so please bear with me as I try to work out my options. I have a few specific queries, but just for background - I am 55 and always thought I would work until at least 60, but this is making me reconsider. Would appreciate thoughts and ideas from anyone who is (or has recently been) going through the same thing.

The questions I have are very specific (and may be impossible to answer with more info) but here goes!

Our Uni guidelines say that the first £30k of the settlement can be paid tax free. Does anyone know what the tax of the remainder would be?

I'm also trying to work out how much of the leaver's payment I could pay into my USS Investment Builder? The Uni  guidelines say that I can do this, but with no detail. (In case its relevant, I'm in the 40% tax bracket and have been paying additional contributions with Salary Sac into the Inv Builder for a couple of years.) Would the amount I can pay in depend on rules within my own University, or USS rules, or tax rules?

I should add, I have asked these questions to my institution, but they are inundated and haven't yet replied. I've also been searching on the USS website, but while there is a lot of talk about "leaving USS" there isn't much about redundancy that I have found so far. (Incidentally, the uni is not using the language of "redundancy" itself, but "leavers" - I don't know if this is relevant...)

I'm going to a briefing about it tomorrow, but any tips of what questions I should be asking would be much appreciated... 

Hi, my understanding is that you can put as much as possible in up to the Annual Allowance threshold (which is currently £60,000, I think). To calculate your AA in USS - again, as far as my understanding goes - you multiply your annuity increase (where the increase is 1/75th of your salary) by 19 then add anything put into the IB. For example, if your salary was £60k per year, and you put £1,000 into the IB each month, you would have ‘used up’ (60,000/75 x 19) + (12 x 1,000) which comes to (does the maths…) £27,200 of your AA, leaving you with £32,800 of the AA limit left (I.e., ‘unused’). But that’s only for the current year, and assumes that you would finish work and take your VS offer at the end of the current financial year. If you finish before the end of March then you would have more of this year’s AA left. And there’s even more, because you can make use of any unused AA from the previous 3 years. I suspect that the Uni could put everything above £30k into the IB if you wanted them to do that (and possibly ALL of the VS settlement if your unused AA allows. You can see how much previously ‘unused’ AA you have by looking at your annual statement (but be aware that the AA was up until very recently £40,000 per year, not £60,000).

gwt1965

SoManyQuestions999 said:

Our Uni guidelines say that the first £30k of the settlement can be paid tax free. Does anyone know what the tax of the remainder would be?

Anything above £30k will be taxed at your marginal rate, so in your case that will be 40%. Depending on your salary and the size of the payment that may go up to 45%.

I'm also trying to work out how much of the leaver's payment I could pay into my USS Investment Builder? The Uni  guidelines say that I can do this, but with no detail. (In case it’s relevant, I'm in the 40% tax bracket and have been paying additional contributions with Salary Sac into the Inv Builder for a couple of years.) Would the amount I can pay in depend on rules within my own University, or USS rules, or tax rules?

Assuming your institution operates like mine, the amount of the leaver’s payment you can contribute will be determined by general tax rules. So, relevant earnings and the £60k annual allowance limit are the things to consider. AIUI, the amount above £30k contributes to your relevant earnings for the year. You can receive tax relief up to your relevant earnings above £60k but only if you have spare allowances that you can carry forward from the previous 3 years. You can see how much annual allowance you’ve used in previous years on your annual member statement, available on the USS site. Just remember to add any gross payments you’ve made to a SIPP outside of USS. Calculating the current year amount of annual allowance you’ve used is a bit more complicated. There’s a modeller on the USS site which gives you a ballpark figure. 

Hope this helps and I’ve got it right. I’m taking voluntary severance through a university scheme at the end of January 2025 and have been trying to answer the same questions. My university won’t pay any extra lump sum into USS on my behalf; they’ve told me I have to make an election to pay the lump sum on the USS site, and to do so by mid-January so that payroll can process it in time for when final payments are made at the end of the month. 

Barralad77

gwt1965 said:

Hope this helps and I’ve got it right. I’m taking voluntary severance through a university scheme at the end of January 2025 and have been trying to answer the same questions. My university won’t pay any extra lump sum into USS on my behalf; they’ve told me I have to make an election to pay the lump sum on the USS site, and to do so by mid-January so that payroll can process it in time for when final payments are made at the end of the month. 

God forbid your Uni does something to help you out (in taking - presumably? - the VS they want people to take). This is the employer that happily made extra contributions to the IB when they dropped the salary cap a couple of years ago, meaning that many staff would have extra put into the IB if they earned over £40k. Now, they’re saying they can’t do that and you need to sort it out yourself; really? 

I’ve asked to take VS next year. Hope they say ‘yes’. Utterly sick and tired of working in HE; it seems shambolic from top to bottom.