USS - General discussion

MarlowMallard

Nick_Dr1 said:

LL_USS said:

I have just realised one more thing. Option 3 there is some DC used and commuted (to buy more DB and thus max the TFLS) but this option 3 also means it triggers MPAA (which is important for this case as it is partial retirement and the person still wishes to contribute further to the pension)

Can you expand on how option 3 triggers MPAA? I assume from your comment it is because there has been some commutation, but I'm not clear why commutation itself triggers MPAA? Thanks

I'm not sure that option 3 does trigger MPAA ?  Buying the additional annual pension with DC is effectively buying a lifetime annuity, and I thought that buying a whole-life annuity does not trigger MPAA  (but fixed-term annuities do) ?

LL_USS

MarlowMallard said:

I'm not sure that option 3 does trigger MPAA ?  Buying the additional annual pension with DC is effectively buying a lifetime annuity, and I thought that buying a whole-life annuity does not trigger MPAA  (but fixed-term annuities do) ?

I am asking USS directly about this - it seems still not clear. This Money helper website https://www.moneyhelper.org.uk/en/pensions-and-retirement/tax-and-pensions/money-purchase-annual-allowance-mpaa says

The MPAA is usually not triggered if you: 

• take up to 25% of your pension as a tax-free cash lump sum and leave the rest invested, or use it to buy a guaranteed income from a lifetime annuity 
• take money from a defined benefit pension. 

If you have an additional voluntary contribution (AVC) scheme, ask your provider or the trustees whether it counts as a defined contribution or defined benefit scheme before taking money. If it’s defined contribution, the withdrawal might trigger the MPAA.

MarlowMallard

LL_USS said:

@mini850 could you please please let me know where to get the information of USS commutation factors please please :-). I don't know where to find that. Thank you.

 https://www.uss.co.uk/for-members/calculate-your-benefits/factors-used-by-uss

Note that in USS jargon, "commutation" is less pension + more cash, "reverse commutation" is the opposite. Factors are slightly different and age-dependent. 

LL_USS

MarlowMallard said:

LL_USS said:

@mini850 could you please please let me know where to get the information of USS commutation factors please please :-). I don't know where to find that. Thank you.

 https://www.uss.co.uk/for-members/calculate-your-benefits/factors-used-by-uss

Note that in USS jargon, "commutation" is less pension + more cash, "reverse commutation" is the opposite. Factors are slightly different and age-dependent. 

@MarlowMallard thank you very much - I will read through this then. So many things to learn

katejo

LL_USS said:

@mini850 could you please please let me know where to get the information of USS commutation factors please please :-). I don't know where to find that. Thank you.

My pension is SAUL not USS but I recently contacted SAUL to ask about their commutation factor. I was told that it depended on my individual situation/when I was going to retire but was currently close to 18.

NTFI19081

I appear to have MPAVC pot from Prudential which has grown in the IB to 50k now. Does anyone know the commutation rates at 56 for this? And/or if it is true that I can reverse commute this cash to buy extra RB pension at preferential rates (compared to using standard RB TFLS), AND without triggering MPPA. Many thanks !

Nick_Dr1

LL_USS said:

MarlowMallard said:

I'm not sure that option 3 does trigger MPAA ?  Buying the additional annual pension with DC is effectively buying a lifetime annuity, and I thought that buying a whole-life annuity does not trigger MPAA  (but fixed-term annuities do) ?

I am asking USS directly about this - it seems still not clear. This Money helper website https://www.moneyhelper.org.uk/en/pensions-and-retirement/tax-and-pensions/money-purchase-annual-allowance-mpaa says

The MPAA is usually not triggered if you: 

• take up to 25% of your pension as a tax-free cash lump sum and leave the rest invested, or use it to buy a guaranteed income from a lifetime annuity 
• take money from a defined benefit pension. 

If you have an additional voluntary contribution (AVC) scheme, ask your provider or the trustees whether it counts as a defined contribution or defined benefit scheme before taking money. If it’s defined contribution, the withdrawal might trigger the MPAA.

I asked USS directly about my quote which had the same three options, and they said that none of the quoted numbers (including the third one with the larger TFLS) triggered MPAA.

mld66

I have a quick question: I am about to start drawing my USS pension in October. I have just got my pension quote and my options are:
max AP= 35,537; TFLS = £29,135; DC=0
max TFLS: AP=26,867; TFLS=£179,118; DC =0
standard Option: AP = £26,867; TFLS = 146,142; DC=0

I also have the option of leaving some of my money invested in the DC part. for example,
AP; 29,891; TFLS= 100,846, DC =29,135

my question is, is there any reason (besides having a lower AP) why I shouldn't just take the max TFLS? am I missing something? I dont have an immediate need for lots of cash but it seems a bit silly not to take it tax free if I can, rather than leave some invested and pay tax on it when I withdraw it. 
thanks

Barralad77

Something doesn’t look right. I would assume the standard option would give you a TFLS of 80,601 (3 x AP), with the remainder (around 99,000) left in DC. At least that’s what I think I should be seeing?

Barralad77

Regardless, you should decide whether you want to reverse-commute some of your cash for extra AP (which happens in your first and fourth scenarios). Also, I’d maybe think about what exposure to tax that extra (£99k?) will be subject to if you take it out. Would you invest it somewhere else? If so, you would have fees to pay and I think any gains would be subject to 20 (or quite possibly, given the size of your AP, 40%) tax. Plus the faff of deciding exactly what to do with it😀