Should I delay taking my USS?

RSTime

I am 59 and have semi-retired. I am a deferred USS member (main pension) and TPS member. I was going to start taking my USS pension this year but a couple of recent pension estimates have shown that in two months my USS pension increased by £1,300 and lump sum by £8,600. I assume this is because the pension is index-linked and also because of the lessening impact of actuarial decrease as I delay. I guess that these increases will continue whilst inflation is high.

Any advice on whether I should further delay taking my USS pension whilst inflation is so high, I have cash funds that I can use to keep me going, and which are presently earning pitiful interest (most cash is protected from tax in the form of NS&I index-linked certificates 😊 and ISAs but I have a pot that is not). My only concern is that I will pay higher rate tax once I take my TPS and state pension, and I am also approaching the lifetime allowance. I guess the key thing is to avoid exceeding the lifetime allowance? My present thinking is to delay taking my USS pension until next year and deplete my cash that is not shielded from tax, and take my TPS early (to keep me under the lifetime allowance)? Is there anything else I should be considering? I guess there is a possibility that the LTA could increase given the workforce challenges thus waiting a few months could be beneficial…

ussdave

If you check the other recent USS thread people talked about some historic rules allowing for part of your pension (the final salary part) to be taken at 60 without reduction.  If that's correct then 60 is definitely the sweet spot as any delay beyond that means you miss out on payments...and of course, before that means actuarial reduction.

I've got a long way to go yet and only a fairly small part of my USS accrual is FS but personally I'm targeting 60ish regardless as the reduction rates currently aren't too bad.  I'll bridge years before that with a sipp.

diddyflanker

Not sure about the rules on the USS but if they are the same as the TPS then there is NO enhancement for leaving the NPA60 pension later than 60. Indeed, if you are not  in a post that can pay into the TPS when you turn 60 that pension enters a payment mode and builds up until you claim it...as it pays it all out when you do claim it then you can be hit be a large income tax bill as it is taxed in the year it is paid.

If you are still in the TPS when you turn 60 then it just doesn't get paid, gets nothing extra and so you simply miss out if you don't claim it then. There are rules on how much it can pay when added to your salary (just the TPS eligible salary), but if you are part-time that shouldn't affect you much.

swindiff

Have you registered with MyUSS  https://www.uss.co.uk/login
You can view your pension on there and see how it changes monthly depending on what age you intend to take your pension.  As Dave says there is quite a step between 60 and 59 and 11 months due to historically being able to retire at 60 with no actuarial reduction for the final Salary part of the pension.

See my post in another thread here

https://forums.moneysavingexpert.com/discussion/comment/79817515/#Comment_79817515

RSTime

swindiff said:

Have you registered with MyUSS  https://www.uss.co.uk/login
You can view your pension on there and see how it changes monthly depending on what age you intend to take your pension.  As Dave says there is quite a step between 60 and 59 and 11 months due to historically being able to retire at 60 with no actuarial reduction for the final Salary part of the pension.

See my post in another thread here

https://forums.moneysavingexpert.com/discussion/comment/79817515/#Comment_79817515

I am a deferred member since 31 August 2014 and the web site shows my pension at that date. I don't think I can get an updated valuation without requesting a statement? I think I asked USS this question in the past...

LornaMorag

If you have previously paid into USS, you can use the USS  Deferred Pension Increase Modeller which can be used in conjunction with the statement you received when you left, or a statement you may have received from USS since leaving the scheme. It allows you to calculate the value of your deferred pension at today's date, and to estimate the value at age 65/66 accordingly using an assumed rate of inflation of your choice! I tried to provide you with the web however, apparently I am not allowed to.

RSTime

I have had a look at the modeller and it asks for a breakdown of pension accrued before 1st October 2011 and also any pension accrued after 1st October 2011 but before 1st October 2020. I do no that any statements as such, just the value of my pension at certain dates over the past few years.

I have never found the USS site particularly useful for forecasting and have just requested a provisional benefits payable statement a couple of times a year.

An additional complication is that I paid AVCs.

How do I get the modeller to work for me?

LornaMorag

Yes I think so

RSTime

I called USS and not straightforward. They are going to send me the split but part of my pension I will get full benefit from at 60, part at 63.5 and part at 65 year old...  

Universidad

RSTime said:

I called USS and not straightforward. They are going to send me the split but part of my pension I will get full benefit from at 60, part at 63.5 and part at 65 year old...  

Yes, and they apply Early Retirement Factors (actuarial reduction for pension taken early) but not Late Retirement Factors (increase for taking it "late"), AFAIK. (There might be a complicated reason underlying this, such as it's not technically a late retirement on the 60 portion if you retire at 65, but the effect is the same).

Anyway, ultimately you have to take all of your pension at once, and the question is whether you want to lose out on pension earnings by taking the "60" portion late, or lose out on pension earnings by taking the "65 portion" early.