USS AVC and pre-retirement questions

atw_uss

Another question or two for USS people (and thank you in advance)!

Since rather belatedly deciding to educate myself on my pension (prompted by OH’s recent retirement at the grand old age of 55 - I am 54), I have learnt a lot, thanks in no small part to this forum. I appear to be in a reasonable position (having had a very useful ‘free’ consultation with an IFA via the union) but am keen to be able to plan to retire sooner rather than later. Thankfully I have some additional pension pots that I’m now consolidating and adding to. I have two questions:

1. I have approx £70K worth of AVC funds (current value) - £20K that was transferred to the USS IB automatically in 2017 (unit linked funds) and £50K in the Prudential with profits cash accumulation fund that I am in the process of moving to the IB. I didn’t think I could use anything from the IB to increase my DB pension, but saw from @PJM_62’spost (attachment bottom of p.1 - https://forums.moneysavingexpert.com/discussion/6278047/uss-retirement-question/p4) that the Pru AVCs might be an exception to this. My question is whether anyone I am correct in thinking this and whether it would be worth it?

2. I am not sure when I will retire officially (definitely no later than 60), but am interested in cutting down as retirement approaches. I’m not sure if it would make more sense to gradually go part-time (say 4 then 3 days a week), or use the USS flexi-retirement option. I think in the latter case I could still keep paying into and increasing my pension (DB and IB) but am not sure how this would compare to simply reducing my hours. USS will do a quote but not until 7 months before potential retirement, so. I can’t do it just yet. I realise my employer would have to agree to this in either case. Any advice/thoughts from those in the know would be very much appreciated.

Tarama

Hello atw_uss

I cannot really help here but just a few points to add from my own experiences.

Re Q1 - I transferred my USS Pru with profits into the IB in 2019 - so cannot comment on this. 

Re Q2 what age is your USS retirement age - it was recently increased to 66 years unless you have some sort of agreement that you can retire from 55 years and not be subject to actuarial reduction. So if you do not have this and plan to retire prior to 66 you  need to factor this in.   

I have limited knowledge about your Q2, but a friend used the flexible retirement policy at 58 years and it seems complex and needs to be carefully considered.   She had a TUPE agreement that she could retire at 55 years with no actuarial reduction.  She opted for - Flexible Percentage = 80% and was given three options - standard benefits, maximum pension and maximum TFLS.  The commutation factor then in 2018 was  22.8141 but I understand it is almost double this now.  You cannot commute IB into RIB from April 2022 as per the thread you posted.  As your salary will be reduced, your USS payments will also be reduced.  In my friends case she was almost as well off doing flexible retirement as working FT due to the TUPE agreement. 

Also my friend  was 'granted' (our HEI had to agree the length of the flexible retirement period)  3 years but really wanted to stay for another year, but was not 'granted' this. So this needs to be checked out.

sorry I can't be of more help - good luck with this

Tarama

atw_uss

Hi @Tarama - many thanks for this. Yes, lots of things to consider and none of them straightforward. My normal pension age is 66, but there is no way I will go beyond 60, so I will have to factor in actuarial reduction, as I don't have any special arrangements in place, unfortunately. What I can't work out is whether going part-time and letting the DB pension keep growing (albeit at a slower rate) or early retirement would make more sense financially. The modellers on the USS website don't really help with the flexi option and there seems to be a lack of detailed information. I can, however, see that I would take a big hit completely retiring early. I will continue building up that pot in the meantime!