USS - General discussion

swindiff

If you have not seen it, this thread is worth a read

https://forums.moneysavingexpert.com/discussion/6439958/uss-vs-tps-university-pension-advice-needed/p1

PJM_62

As someone that recently got diagnosed with cancer, I'm glad that I didn't commute a chunk of tfls for pension. Along with my IB, I think it's better off in savings and being drawn on as necessary,  by me (or future beneficiary) until it runs out. 

kermchem

LL_USS said:

@swindiff Thank you soooooooooooooooooooooooo much. I can see now where all the numbers above fit (and the reversed commutation for 60y about the same as in the factors listed by USS). Brilliant. I did not like it very much that I was completed ignorant of those "factors" and how they link to "my numbers" as in the forecast. 

@Barralad77 and @swindiff thank you for the note regarding tax implication for increased annual pension. I will look at this again more carefully. My current thought, after your note, is that I am contributing anything over to the 40% tax threshold into my DC (plus benefitting from the NI exemption for that whole amount for now), so when I take the pension out and pay 20% tax it is fine. Together with SP it won't reach the 40% tax band anyway. I currently do priotise putting any unspent money from my take-home income into ISAs. 

I will look more into whether it's silly to "buy £2,587/year DB using £54,142". Do you mean if it's too expensive then I should try to just take DB=18K and there's another method to get more from this 54K , like just keep it in DC to invest? £54,142 invested at 5% yields £2,707/year. 

Regarding my number of years for NI contribution, it is taken from my NI record on the Gov gateway and I suppose I can only count "full years": 

I did study for too long, only working full time from 2008, first for a new university (TPS) then a red brick one (with USS pension). I think this record is right and I can only count my NI years from 2008. 

You will not be able to generate a yield of 5% long term in retirement. Look at threads that discuss safe withdrawal rate. In the US it is normal to assume 4%, and the UK value is reckoned to be a little less. 

For your NI record have look a bit further back. For many years I assumed I would need to work to 62 to get a full pension at 67, and then suddenly I found that I had been given NI credits for the years when I was 17 and 18. 

MarlowMallard

Agree with commenters above. 
Regarding the "factor 12" commutation, the TPS and Civil Service don't allow you to buy extra pension at this rate - you can only give up £1k pension for £12k lump sum which is generally regarded as a bad deal.  The USS allows commuting both ways up to limits. 
 One other point - if you retire in early 60s and are short of full state pension, you can just buy additional NI years with voluntary contributions - this is an absolute bargain as it's about £900 to buy a year and it gives you £300 pa extra pension for life. I believe you can even buy NI years after you start claiming state pension, though the increase will not be backdated. 

LL_USS

@Barralad77, @swindiff, @PJM_62, @kermchem, @MarlowMallard

thank you all - lots for me to digest and to further check - I really appreciate these. 
@kermchem- I meant even with 5% return it would not be a much better option to keep investing this amount of DC rather than buying more DB. Still more to think about I suppose. Also 2003 is my earliest record for any work ever done in the UK whilst studying am afraid ;-).

@MarlowMarllard great to know I will be able to "buy" NI contribution even when not working. 

@PJM_62 sorry to hear about your diagnosis. I do too prefer to only leave a minimum level in pension (though I am still trying to work out what is "just enough" for my DB) and take out what I can to have the flexibilty to use the money when I need.