USS - General discussion

katejo

uss_tish said:

Hello, original poster here seeking advice on my son's USS membership. Son works 0.5 FT in a senior admin role and was enrolled in USS; he has recently started another 0.5FT role at a lower grade at the same University but has been enrolled in the University’s own retirement fund for that role - should he have been enrolled in USS for both given he is already a USS member? The second, lower grade role would ordinarily not qualify for USS enrolment. The University’s  own pension scheme is DC.

It does sound a bit odd. I am on SAUL which is the uni pension scheme for admin grades. I went straight onto DB in 1990 but I do know that new staff now get a DC introductory scheme for the first 2 years before being allowed onto the DB one.

Asimovs_nightfall

Given the round of redundancies in the HE sector, can anyone advise or give their experiences of the following scenario:

Redundancy payment, circa £50,000

1. The first £30,000 is tax free - this is statutory, yes?
2. At the age of (let's say) 59 and six months, there is no requirement to take USS pension, thereby not triggering ERF?
3. At the age of (let's say) 65, same as above, there is no requirement to take USS pension?
4. If not taking pension, in either of above cases, the £20,000 taxable proportion from the redundancy payment can be input into the pension pot (notwithstanding the annual allowance for the moment)?

Any views/advice on this?

Thanks 

Barralad77

Asimovs_nightfall said:

Given the round of redundancies in the HE sector, can anyone advise or give their experiences of the following scenario:

Redundancy payment, circa £50,000

1. The first £30,000 is tax free - this is statutory, yes?
2. At the age of (let's say) 59 and six months, there is no requirement to take USS pension, thereby not triggering ERF?
3. At the age of (let's say) 65, same as above, there is no requirement to take USS pension?
4. If not taking pension, in either of above cases, the £20,000 taxable proportion from the redundancy payment can be input into the pension pot (notwithstanding the annual allowance for the moment)?

Any views/advice on this?

Thanks 

As far as my understanding goes:
(1) Yes, the first £30k is free of tax
(2) and (3) You don’t have to take the pension at either 59 or 65.
(4) If your employer is ok with doing that, then yes.

The is (at least one) caveat to the above about the triggering of the ERFs that hinges on your normal pension age. Contributions made up to 2011 (possibly starting in 95, but that will need someone else to confirm) have a normal pension age of 60 which, ordinarily, would mean no ERF being applied to that portion of the pension if you take it once you’re 60. But this is only true if you are still in work when you turn 60 and take your pension after that date. If you finish work before reaching 60 then that normal pension age (of 60) changes to 63.5. The net result is that if you finish at age 59 but then decide to take your pension before reaching 63.5 then ERFs will be applied to those contributions. Note that this doesn’t apply to other portions of your pension (e.g., where the normal pension age is 65, or 66 as it is currently).

In short, if you finish work at 59 and then take the pension at 60 (or 61, or 62, or even 63 years, 5 months and 29/30 days) an ERF for taking it early will apply to those pre-2011 contributions.
However, if you finish work after turning 60 and take your pension at that point (I.e., also at 60) then the ERF won’t be applied to the pre-2011 contributions.

Asimovs_nightfall

Barralad77 said:

Asimovs_nightfall said:

Given the round of redundancies in the HE sector, can anyone advise or give their experiences of the following scenario:

Redundancy payment, circa £50,000

1. The first £30,000 is tax free - this is statutory, yes?
2. At the age of (let's say) 59 and six months, there is no requirement to take USS pension, thereby not triggering ERF?
3. At the age of (let's say) 65, same as above, there is no requirement to take USS pension?
4. If not taking pension, in either of above cases, the £20,000 taxable proportion from the redundancy payment can be input into the pension pot (notwithstanding the annual allowance for the moment)?

Any views/advice on this?

Thanks 

As far as my understanding goes:
(1) Yes, the first £30k is free of tax
(2) and (3) You don’t have to take the pension at either 59 or 65.
(4) If your employer is ok with doing that, then yes.

The is (at least one) caveat to the above about the triggering of the ERFs that hinges on your normal pension age. Contributions made up to 2011 (possibly starting in 95, but that will need someone else to confirm) have a normal pension age of 60 which, ordinarily, would mean no ERF being applied to that portion of the pension if you take it once you’re 60. But this is only true if you are still in work when you turn 60 and take your pension after that date. If you finish work before reaching 60 then that normal pension age (of 60) changes to 63.5. The net result is that if you finish at age 59 but then decide to take your pension before reaching 63.5 then ERFs will be applied to those contributions. Note that this doesn’t apply to other portions of your pension (e.g., where the normal pension age is 65, or 66 as it is currently).

In short, if you finish work at 59 and then take the pension at 60 (or 61, or 62, or even 63 years, 5 months and 29/30 days) an ERF for taking it early will apply to those pre-2011 contributions.
However, if you finish work after turning 60 and take your pension at that point (I.e., also at 60) then the ERF won’t be applied to the pre-2011 contributions.

Thanks for that. The ERF's are a real minefield.  

On No.4, is this down to scheme or institutional rules?  Your response suggests the latter.

Cobbler_tone

Asimovs_nightfall said:

Barralad77 said:

Asimovs_nightfall said:

Given the round of redundancies in the HE sector, can anyone advise or give their experiences of the following scenario:

Redundancy payment, circa £50,000

1. The first £30,000 is tax free - this is statutory, yes?
2. At the age of (let's say) 59 and six months, there is no requirement to take USS pension, thereby not triggering ERF?
3. At the age of (let's say) 65, same as above, there is no requirement to take USS pension?
4. If not taking pension, in either of above cases, the £20,000 taxable proportion from the redundancy payment can be input into the pension pot (notwithstanding the annual allowance for the moment)?

Any views/advice on this?

Thanks 

As far as my understanding goes:
(1) Yes, the first £30k is free of tax
(2) and (3) You don’t have to take the pension at either 59 or 65.
(4) If your employer is ok with doing that, then yes.

The is (at least one) caveat to the above about the triggering of the ERFs that hinges on your normal pension age. Contributions made up to 2011 (possibly starting in 95, but that will need someone else to confirm) have a normal pension age of 60 which, ordinarily, would mean no ERF being applied to that portion of the pension if you take it once you’re 60. But this is only true if you are still in work when you turn 60 and take your pension after that date. If you finish work before reaching 60 then that normal pension age (of 60) changes to 63.5. The net result is that if you finish at age 59 but then decide to take your pension before reaching 63.5 then ERFs will be applied to those contributions. Note that this doesn’t apply to other portions of your pension (e.g., where the normal pension age is 65, or 66 as it is currently).

In short, if you finish work at 59 and then take the pension at 60 (or 61, or 62, or even 63 years, 5 months and 29/30 days) an ERF for taking it early will apply to those pre-2011 contributions.
However, if you finish work after turning 60 and take your pension at that point (I.e., also at 60) then the ERF won’t be applied to the pre-2011 contributions.

Thanks for that. The ERF's are a real minefield.  

On No.4, is this down to scheme or institutional rules?  Your response suggests the latter.

A 'good' employer should always look to allow 'redundancy sacrifice.' The first £30k doesn't count as relevant earnings. It'd be one of the first questions I asked to get on a Q&A during consultation.

Barralad77

Asimovs_nightfall said:

Barralad77 said:

Asimovs_nightfall said:

Given the round of redundancies in the HE sector, can anyone advise or give their experiences of the following scenario:

Redundancy payment, circa £50,000

1. The first £30,000 is tax free - this is statutory, yes?
2. At the age of (let's say) 59 and six months, there is no requirement to take USS pension, thereby not triggering ERF?
3. At the age of (let's say) 65, same as above, there is no requirement to take USS pension?
4. If not taking pension, in either of above cases, the £20,000 taxable proportion from the redundancy payment can be input into the pension pot (notwithstanding the annual allowance for the moment)?

Any views/advice on this?

Thanks 

As far as my understanding goes:
(1) Yes, the first £30k is free of tax
(2) and (3) You don’t have to take the pension at either 59 or 65.
(4) If your employer is ok with doing that, then yes.

The is (at least one) caveat to the above about the triggering of the ERFs that hinges on your normal pension age. Contributions made up to 2011 (possibly starting in 95, but that will need someone else to confirm) have a normal pension age of 60 which, ordinarily, would mean no ERF being applied to that portion of the pension if you take it once you’re 60. But this is only true if you are still in work when you turn 60 and take your pension after that date. If you finish work before reaching 60 then that normal pension age (of 60) changes to 63.5. The net result is that if you finish at age 59 but then decide to take your pension before reaching 63.5 then ERFs will be applied to those contributions. Note that this doesn’t apply to other portions of your pension (e.g., where the normal pension age is 65, or 66 as it is currently).

In short, if you finish work at 59 and then take the pension at 60 (or 61, or 62, or even 63 years, 5 months and 29/30 days) an ERF for taking it early will apply to those pre-2011 contributions.
However, if you finish work after turning 60 and take your pension at that point (I.e., also at 60) then the ERF won’t be applied to the pre-2011 contributions.

Thanks for that. The ERF's are a real minefield.  

On No.4, is this down to scheme or institutional rules?  Your response suggests the latter.

My understanding is that it is the latter, but I’ve been told by various people that it is rarely - if ever - refused. In other words, it’s highly likely that your employer would be fine putting anything over the £30k cash into the Investment Builder (assuming you have enough of your Annual Allowance remaining. This, too, is very likely to be the case as you can draw on the previous 3 year’s allowances if necessary).

SlimJim_B

In response to Swindiff's question about taking extra annual DB, the other thing in favour if you have a beneficiary e.g. spouse, is that they will benefit from the extra 3k DB if you die first.

SlimJim_B

Has anyone had a cashflow analysis done by a financial adviser? and would they recommend that adviser? and if you don't mind me asking how much was it?

I have my own simple excel version and have come across a couple of DIY ones which I have downloaded with mixed results but I would be happier to have a professional version to make sure I am not about to unwisely retire early.
I would only want them to do a cashflow analysis.
Thanks in advance.

swindiff

SlimJim_B said:

In response to Swindiff's question about taking extra annual DB, the other thing in favour if you have a beneficiary e.g. spouse, is that they will benefit from the extra 3k DB if you die first.

I'm not sure that is correct. I think they get 50% of the standard DB annual pension. The extra from reverse commutation I don't think is included in that 50%

HE_is_going_to_the_dogs

Hello
Firstly, can I just say that this thread (and others on the forum) are the best source of info about the USS I've found anywhere, so thanks to all those who have contributed.

I've joined the forum to run a scenario past you... I am 52, and intending to stop working at 56. I'm currently paying into AVCs in order to boost my Investment Builder pot. My plan is to withdraw 16,000 per year from the IB pot and live off that (combined with savings) until taking my Retirement Builder pension at 64/65ish (depending on the maths of the ERFs). My thinking is that all of the 16,000 will be tax free (4,000 is the 25% allowance, and the remaining 12,000 will be under the income tax threshold).

So, first question: does anyone see a flaw with the logic?

Second question: what are the implications for the tax free lump sum available when I take the RB pension? Are the RB and IB totals still combined for working out the total amount tax free?

Let's do it with some hypothetical numbers...
Investment builder pot = 200k
Retirement builder = 25k
RB lump sum = 75k

If I've understood earlier comments correctly, if I took everything at the same time, I could take 193,750 tax free (which is 25% of ((20x25k)+75k+200k) ie 25% of 775k).

Let's say I've already taken 100k out of the IB pot, 25k of which was tax free. How much tax free can I now get when I take my DB pension? Is it:
A. 168,750 (RB and IB still combined, less the 25k already withdrawn tax free)

B. 100,000 (RB and IB treated separately, so 75k RB lump sum, plus 25% of the remaining 100k in the IB pot).

C. Something else.

Thanks for any comments.

HE...