USS and Investment Builder

Mrs_Binxtoria

Hello I am a USS member and have a hybrid pension that is made up of DB retirement builder and DC into the investment builder.  Currently I pay in an extra £49 per month from my salary into the investment builder.  Looking at my statements it tells me how much I have paid in to date but what I can't ascertain is if it also topped up by the government by tax relief, does anyone know the answer to this as I see a few members of USS frequent these boards?

Would I be better off still doing this via work or should I be considering a SIPP?

I am trying to get my ducks in a row and am starting to seriously look at my pensions.

Many thanks in advance.

ussdave

There's a fair few USS members so I highly recommend reading through the various threads.  Lots of useful information

Regarding tax relief, do you know if you pay via salary sacrifice (quite likely if you're paying the 1% 'match')?  If so, you won't get a tax relief 'top up' but actually get a better benefit - SS means you'll only be paying ~£66.5 in take home pay for £100 worth of money into your Investment Builder pot.  On top of that, there are favourable conditions when it comes to withdrawing that money too so it's unlikely the SIPP is a better choice in terms of tax relief.  This is assuming basic rate tax.  The benefits are better still if you're paying enough higher rate tax.

Where a SIPP is a good choice is if you want to be able to retire for a time and avoid drawing your USS pension for a number of years (e.g. to avoid early retirement factors/reductions).  In this case you could choose to also build up a SIPP to provide you an income for that interim period.

Linton

If you pay into your pension  before tax is deducted then you dont get any tax relief because you are not taxed on the money in the first place, it is deducted from your otherwise taxable pay before tax is calculated.  So exactly the same result unless you are paying so much pension that your take home pay is not taxed.

The advantage of IB is that if you take the DB and DC pension together the tax free lump sum can be paid from the IB money so leaving a higher DB pension.

The advantage of a SIPP is that if you retire early you can live off the SIPP without taking the USS pension early.

Mrs_Binxtoria

Thanks @ussdave. I have been reading some of the threads but some of the posters have larger salaries /service than me so I can't relate easily.  I am not on salary sacrifice and my employer doesn't pay the match, they have stopped doing this, so it is only the extra contributions I make and I am a basic rate tax payer.

From what you are suggesting I would be better off asking about salary sacrifice?  Would this affect my NI contributions and State Pension?

Mrs_Binxtoria

So i have been reading some FAQs from university and it will only be my normal employee contributions to the pension that can be salary sacrificed, my AVCs are not matched.

For members of USS 

·       You will stop making your employee pension contributions of 8% or 9% to the USS.

·       The University will pay an additional amount equivalent to your employee pension contribution directly into the USS.

·        Additional Voluntary Contributions (AVC) paid to the USS Investment Builder under the “Matched” arrangement will form part of Pension Salary Exchange but those paid as “unmatched” will NOT form part of the Pensions Salary Exchange

With the above in mind am I better off taking salary sacrifice for the employee contributions and then using the 'increase' in pay to set up a SIPP?  My annual saving would be ~£206

Just really trying to get to grips with everything and plan for my future.

Mrs_Binxtoria

Sorry @Linton our posts crossed.

Interesting about the IB and taking a lump sum from there instead and leaving the DB part untouched.

So thinking about it I could still pay the additional savings into the IB plus other AVCs and achieve a good result without the need for a SIPP?  Unfortunately I won't be in a position to retire early  I am 48 and have left it a bit late to look at pensions properly