USS income builder - annual allowance

deltrotter

Hi everyone

I am thinking about joining a university in the USS scheme.

Has anyone worked out how much of the £40K annual allowance is used up if you pay into the USS income builder scheme for the full year?

This used to be quite difficult to work out in the past as it was salary related when I worked in the sector a number of years ago, but I suspect now that it is a fixed amount that it would be possible to work out how much of the annual allowance is used up by the income builder component.

Reason for asking is I am trying to work out how much is left over for me to contribute in the Investment Builder as I would look to add more than the minimum contribution.

TIA

Del

Tomatillo

They have a caclulator here that might help https://www.ussbenefitmodeller.co.uk/annual_allowance/calculator

Universidad

deltrotter said:

I am thinking about joining a university in the USS scheme.

If you're going there for the job and don't care about the pension too much, then good luck to you, the sector needs good people.

If you're thinking about taking the job largely because of the pension, I'd advise you to really look into it extra hard. The fact of it being an open DB pension in this day and age leads to some biased assumptions about how good it is.

Although USS is a defined benefit scheme, it has some significant limitations. It has a low accrual rate, and a salary cap on DB pensions. Over a 40 year career it's not possible to build up more than about 19000 pounds in annual defined pension in USS, and their IDC scheme above the salary cap is nothing to write home about. (That implementation is still happening, though, and will affect all benefits accrued from April this year.)

And in the HE sector salaries have been supressed for over a decade, which really hurts what your career average will look like come retirement. Plus benefits accrued will only be revalued up to 2.5% CPI, so you can imagine how that would be going right now if they hadn't postponed the implementation a couple of years. (That implementation is still happening, though, and will affect all benefits accrued from April this year.)

Basically you're paying for inflation at both ends with USS - once as your salary fails to match it, and again as your accrued benefits fail to keep up.

The TPS scheme operating in a lot of the post-92 Universities provides significantly better accrual rates - one wonders how sustainable it will be for the most prestigious Universities to offer substantially worse benefits. People in senior positions in Russell Group uni are in denial, and seem to think we get paid in reputation points like some video game!

deltrotter

Thanks both

Universidad, all fair points IMO. I had 21 years in USS up to early 2019 so a much better time period to be in it.

Horrified to see what has become of the USS pension now. It is an incredible downgrading.

I am coming to the end'ish of my career and tbh the Income Builder part is of less interest to me than how much I can contribute to the Investment Builder.