USS - From April - Employers Contribution and Salary Sacrifice.

Simes122

MPLMPL said:

Contribution is no longer increasing to 11%, stays at 9.8%.

https://www.uss.co.uk/for-members/your-statutory-notice-of-changes-to-uss

What’s not changing

Your contribution rate will remain at 9.8%, and there are no changes to Normal Pension Age. You’ll also still receive life cover and other benefits for loved ones, and will still be entitled to ill health cover. And benefits built up before 1 April 2022 will remain unchanged.

Ok, so two elements and it almost helps to see them separately.

costs to member: 9.8%
benefits: DB up to £40k @ 1/85 accrual pa, and 20% of earnings >40k in to DC above threshold

Simes122

Simes122 said:

MPLMPL said:

Contribution is no longer increasing to 11%, stays at 9.8%.

https://www.uss.co.uk/for-members/your-statutory-notice-of-changes-to-uss

What’s not changing

Your contribution rate will remain at 9.8%, and there are no changes to Normal Pension Age. You’ll also still receive life cover and other benefits for loved ones, and will still be entitled to ill health cover. And benefits built up before 1 April 2022 will remain unchanged.

Ok, so two elements and it almost helps to see them separately.

costs to member: 9.8%
benefits: DB up to £40k @ 1/85 accrual pa, and 20% of earnings >40k in to DC above threshold

Had this confirmed today.   Annual allowance is consumed on the DB part up to £40k in the usual way, and 20% of pre-Sal sac salary >£40k plus any additional  contributions you make for the DC part.

deltrotter

Ok, so in the £80k example how much of the annual allowance of £40k is used based on normal pension contribution. The £8k above the DB post is clear, but how much is the DB part in annual allowance terms?

Tia

Simes122

deltrotter said:

Ok, so in the £80k example how much of the annual allowance of £40k is used based on normal pension contribution. The £8k above the DB post is clear, but how much is the DB part in annual allowance terms?

Tia

That’s more complex to calculate.   You’d need to use a tool like this, which I’d assume you’d only use value of the DB portion of salary (ie max £40k) that is used for accruing DB benefits.(someone smarter than me will chip in if I have that wrong!).  

I think it’s the case for this purpose that your pensionable salary is £40k at the start and £40k at the end of your pension input period, because of the cap in the scheme.

Then add these results to your DC benefits to see how much annual allowance is used,

https://www.pruadviser.co.uk/xpf_calculators/defined-benefit-pension-input-tool/

Simes122

However I think it’s further complicated because of all the changes to the scheme.  Eg last tax year we had a different threshold, and different accrual rate, making it almost impossible to calculate how much pension you’ve used yourself! 

deltrotter

Thanks both!

Gee, it really seems complicated.

I guess you could wait until the pension statement each year and use carry forward to make up any allowance from the previous year you hadn't used!

Simes122

deltrotter said:

Thanks both!

Gee, it really seems complicated.

I guess you could wait until the pension statement each year and use carry forward to make up any allowance from the previous year you hadn't used!

Yes in principle.  The pension statement comes in the October after the tax/pension year that ends in April.   So it’s slow, but early enough for you to modify your contributions for the current tax year to maximise carry forward.   The problem I have is that I’m in my final year of work and have used up all my carry forwards.  So I’m driving largely blind.  I won’t get last years pension statement till this October, and next year I retire I think in April, so won’t know if I’ve paid too much till after I’ve retired, right at a time I want to maximise my contributions and save costly tax/NI (54.25% marginal rate here in Scotland). 

Another thing to think about in your final year is your March pay won’t hit your pension till after the new tax year in April I think.  So your last pension contribution in a given tax year is really your February pay.