To transfer or not to transfer? USS to "X"

JohnEricsson

What should I be looking out for when considering switching pensions.  
age 55.
current pensions (for one month more) is with USS. over 25 years.

I am more than happy with the figures they have provided me on projected pension based on money paid to date. I don't want to gamble.

 USS mention "The Retirement Income Builder is the defined benefit(DB) part of USS – one of only a few left in the UK. This provides a guaranteed income for life plus a one-off, cash lump sum once you retire"

I hear good and bad things about the USS.

ALSO. my salary will be going down by £25K with my new employer (I am winding down to retirement).

Can I have your initial thoughts. I have not mentioned my new pension provider because I really want that gut reaction of  what i current have
is it good?
is it bad?
is it "there is no way to tell from the minimum information you have provided",
is it "I dont understand what you are asking"


 

ussdave

Your accrued benefits with USS are good but you can't really know if it's worth transferring without getting a CETV and quote from your new provider.  If they are (e.g) LGPS then you may find the transfer offer is worthwhile.

That said, there's likely other things to consider, such as target retirement age and ERFs for USS vs whoever the new provider is. 

I would not be surprised if the best option is to leave the USS benefits where they are for now and to start to accrue pension in your new role with the standard pension provider.  That is based on the assumption that changing roles (and accepting lower renumeration) is something you've chosen as part of winding down to retirement.

Can you give more information about the new pension?

Marcon

JohnEricsson said:

What should I be looking out for when considering switching pensions.  
age 55.
current pensions (for one month more) is with USS. over 25 years.

I am more than happy with the figures they have provided me on projected pension based on money paid to date. I don't want to gamble.

 USS mention "The Retirement Income Builder is the defined benefit(DB) part of USS – one of only a few left in the UK. This provides a guaranteed income for life plus a one-off, cash lump sum once you retire"

I hear good and bad things about the USS.

ALSO. my salary will be going down by £25K with my new employer (I am winding down to retirement).

Can I have your initial thoughts. I have not mentioned my new pension provider because I really want that gut reaction of  what i current have
is it good?
is it bad?
is it "there is no way to tell from the minimum information you have provided",
is it "I dont understand what you are asking"


 

Without knowing what sort of pension you'll have in your new job, it's impossible to answer your question. If you will be joining a defined contribution scheme, you've already got your answer: you don't want to gamble and you are happy with the USS figures. If you're going to a DB scheme, you need to get a CETV from the USS once you've left and get your new scheme to give you a quote on what it would 'buy' if you did transfer.

SMcGill

With 25 years of USS pension accrual a large chunk of what you’ve accrued will presumably be from pre-2011 which is when I think USS really started making changes and I would be gobsmacked if your next employer offered the same guaranteed benefits. 

Universidad

There's a lot of negative things one can say about USS, but they largely apply to where the scheme is now, rather than what it was offering 25 years ago.

USS is literally so bad now that I left the sector after working in it nearly as long as you, because of the cuts.

But I *didn't* transfer my benefits out of USS. Current members are subsidising them, honestly.

Nobody can tell you what the right outcome will be for you, but from recent experience I can tell you what is likely.

It is likely that the transfer out value USS offer will be lower than comparable offers from many other private pension schemes, which will limit the value of transferring out.

It is unlikely that you will be able to transfer it to another scheme unless that is also a DB scheme, because of its value.

If it is another DB scheme at your new workplace, it is unlikely that the transfer value USS offer you will be sufficent for the recieving scheme to match the benefits you expect to get from USS.

And it is likely that even if they do, that the age at which you can retire with USS will be lower than your new scheme.

Most receiving DB schemes will now be tied to state pension age. However, your benefits with USS up to 2011 can be taken without reduction at 63.5, and 2011 up to 2020 at 65. (66 from 2020 onwards). So in theory if you take your USS pension at 63.5, it might only be actuarially reduced by about 8%, give or take (nothing for years up to 2011, 1.5 years for years up to 2020, and 2.5 years after 2020). That difference between USS and a new "State Pension Age" scheme will add up, fast.

However, USS will let you transfer out anything that you have in the DC pot (Investment Builder) leaving the DB part alone (Income Builder). That might very well be worth doing, for various reasons, but it depends on your circumstances. You'll have at least *something* in that pot if you were still in  USS this year and earned more than 40K in that time, or more than about 60K per year from 2015ish.