USS Retirement Options

NickBFS

In order not to trigger the MPAA, you can only draw down the tax-free element of your DC pot. This is only possible if your scheme allows for flexi drawdown. USS does not do that and only allow UFPLS (where 75% of what you draw down is taxable and 25% tax-free). If you want to withdraw from your IB pot without triggering the MPAA, you need to transfer that pot to a SIPP that allows flexi drawdown.

Once you have done that, you can then withdraw 25% of the pot tax-free, leaving the other 75% crystallised and subject to tax when you drawn them down at a later stage. As long as you only drawn down the tax free element, you will not trigger the MPAA

USS do not, afaik, allow you to transfer part of your IB pot to a SIPP. You have to transfer all of it. However, nothing prevents you from continuing to contribute to the IB after you have transferred what was in it (start in the IB from scratch again, as it were).

FIREmenow

NickBFS said:

USS do not, afaik, allow you to transfer part of your IB pot to a SIPP. You have to transfer all of it. However, nothing prevents you from continuing to contribute to the IB after you have transferred what was in it (start in the IB from scratch again, as it were).

This is what I will do - more to have the option to use the IB pot to bridge early retirement years without having to take the RB too early. I'll have a think about whether I want to avoid triggering MPAA nearer to the time.

Because you can only transfer the whole pot out, The thing I need to work out is when to transfer the pot out to give it enough time to build up again from zero to the max lump sum I can take with the RB.

LL_USS

NickBFS said:

In order not to trigger the MPAA, you can only draw down the tax-free element of your DC pot. This is only possible if your scheme allows for flexi drawdown. USS does not do that and only allow UFPLS (where 75% of what you draw down is taxable and 25% tax-free). If you want to withdraw from your IB pot without triggering the MPAA, you need to transfer that pot to a SIPP that allows flexi drawdown.

Once you have done that, you can then withdraw 25% of the pot tax-free, leaving the other 75% crystallised and subject to tax when you drawn them down at a later stage. As long as you only drawn down the tax free element, you will not trigger the MPAA

USS do not, afaik, allow you to transfer part of your IB pot to a SIPP. You have to transfer all of it. However, nothing prevents you from continuing to contribute to the IB after you have transferred what was in it (start in the IB from scratch again, as it were).

Thank you Nick. I understand a bit better now. It doesn't look like a very attractive option to take out money from DC pot early, I'd better wait till taking bot DB and DC together to maximise the lump sum then. This information certainly helps me plan where to put the money and how to take it out. Without the dream to help the kids up the property ladder (meaning I would need money sooner than normal retirement age), I would put more in volunteer contributions. But with a plan to have some good sum of money at different times before retirement, I may just make a small volunteer contributions for the amount above the threshold of lower tax band and child benefit high income penalty. The rest of saving I may have to persevere with shorter term investments till I need the cash. Maybe back to Lifetime ISA a bit more if I feel "this is the money I want to take out to treat myself at 60, instead of giving it all to the kids" . Then take it from there.

2nd_time_buyer

FIREmenow said:

NickBFS said:

USS do not, afaik, allow you to transfer part of your IB pot to a SIPP. You have to transfer all of it. However, nothing prevents you from continuing to contribute to the IB after you have transferred what was in it (start in the IB from scratch again, as it were).

This is what I will do - more to have the option to use the IB pot to bridge early retirement years without having to take the RB too early. I'll have a think about whether I want to avoid triggering MPAA nearer to the time.

Because you can only transfer the whole pot out, The thing I need to work out is when to transfer the pot out to give it enough time to build up again from zero to the max lump sum I can take with the RB.

That make sense but I am wondering if you could transfer out the whole pot, then only transfer back in the amount required for max lump sum (?). That way you leave the savings in the USS Investment Builder for much longer,

NickBFS

2nd_time_buyer said:

That make sense but I am wondering if you could transfer out the whole pot, then only transfer back in the amount required for max lump sum (?). That way you leave the savings in the USS Investment Builder for much longer,

Interesting idea. Can you transfer back an uncrystallised pot in a SIPP to the USS IB?

Also, I guess a potential downside of that (if you can do it) would be that you would then be subject to fees (since the employer fees subsidy does not apply to transfers)

2nd_time_buyer

NickBFS said:

2nd_time_buyer said:

That make sense but I am wondering if you could transfer out the whole pot, then only transfer back in the amount required for max lump sum (?). That way you leave the savings in the USS Investment Builder for much longer,

Interesting idea. Can you transfer back an uncrystallised pot in a SIPP to the USS IB?

Also, I guess a potential downside of that (if you can do it) would be that you would then be subject to fees (since the employer fees subsidy does not apply to transfers)

As far as I can tell it seems okay to transfer in a SIPP the only requirement I can see is that "your previous scheme is registered with HMRC"

My thinking was to do this 1 year before retiring so that the management fees would be minimal. I am not sure how much difference it will make financially but it might be more flexible. My main concern is that if I empty the pot now, I am then tied into my job until I can replenish it.

NickBFS

You have given me some food for thought. Thanks.

2nd_time_buyer

2nd_time_buyer said:

FIREmenow said:

NickBFS said:

USS do not, afaik, allow you to transfer part of your IB pot to a SIPP. You have to transfer all of it. However, nothing prevents you from continuing to contribute to the IB after you have transferred what was in it (start in the IB from scratch again, as it were).

This is what I will do - more to have the option to use the IB pot to bridge early retirement years without having to take the RB too early. I'll have a think about whether I want to avoid triggering MPAA nearer to the time.

Because you can only transfer the whole pot out, The thing I need to work out is when to transfer the pot out to give it enough time to build up again from zero to the max lump sum I can take with the RB.

That make sense but I am wondering if you could transfer out the whole pot, then only transfer back in the amount required for max lump sum (?). That way you leave the savings in the USS Investment Builder for much longer,

Has anyone else got any thoughts on whether this would work?

Otherwise, I am getting very close to the point where if I need to decide whether to transfer out the whole pot in order to give it time to build back up.

The SIPP platform I was looking at, II, allows partial transfers out. So the only thing I can think that would prevent it would be if the transfer-in to the USS it's treated differently in terms of how the benefits can be used. However, I can't see anything on the website saying that is the case.

ussdave

2nd_time_buyer said:

2nd_time_buyer said:

FIREmenow said:

NickBFS said:

USS do not, afaik, allow you to transfer part of your IB pot to a SIPP. You have to transfer all of it. However, nothing prevents you from continuing to contribute to the IB after you have transferred what was in it (start in the IB from scratch again, as it were).

This is what I will do - more to have the option to use the IB pot to bridge early retirement years without having to take the RB too early. I'll have a think about whether I want to avoid triggering MPAA nearer to the time.

Because you can only transfer the whole pot out, The thing I need to work out is when to transfer the pot out to give it enough time to build up again from zero to the max lump sum I can take with the RB.

That make sense but I am wondering if you could transfer out the whole pot, then only transfer back in the amount required for max lump sum (?). That way you leave the savings in the USS Investment Builder for much longer,

Has anyone else got any thoughts on whether this would work?

Otherwise, I am getting very close to the point where if I need to decide whether to transfer out the whole pot in order to give it time to build back up.

The SIPP platform I was looking at, II, allows partial transfers out. So the only thing I can think that would prevent it would be if the transfer-in to the USS it's treated differently in terms of how the benefits can be used. However, I can't see anything on the website saying that is the case.

I'm fairly sure you can do this, but I eventually landed on sticking to the original approach you've gone for.  I think purely monetarily the case is thre for a double transfer, but the extra timing stress just didn't seem worth it to me.

Reasons against:
1. Money transferred in will be subject to ongoing management charges (not a big deal if you're planning to just draw it all out again imminently via TFLS).  

2. Timings become a bit more complex in terms of making sure you have enough time to transfer out and back in before you draw your pension.

Reasons for:

1. Potentially longer period of your funds remaining in the IB and having reduced/zero fees.

2nd_time_buyer

ussdave said:

2nd_time_buyer said:

2nd_time_buyer said:

FIREmenow said:

NickBFS said:

USS do not, afaik, allow you to transfer part of your IB pot to a SIPP. You have to transfer all of it. However, nothing prevents you from continuing to contribute to the IB after you have transferred what was in it (start in the IB from scratch again, as it were).

This is what I will do - more to have the option to use the IB pot to bridge early retirement years without having to take the RB too early. I'll have a think about whether I want to avoid triggering MPAA nearer to the time.

Because you can only transfer the whole pot out, The thing I need to work out is when to transfer the pot out to give it enough time to build up again from zero to the max lump sum I can take with the RB.

That make sense but I am wondering if you could transfer out the whole pot, then only transfer back in the amount required for max lump sum (?). That way you leave the savings in the USS Investment Builder for much longer,

Has anyone else got any thoughts on whether this would work?

Otherwise, I am getting very close to the point where if I need to decide whether to transfer out the whole pot in order to give it time to build back up.

The SIPP platform I was looking at, II, allows partial transfers out. So the only thing I can think that would prevent it would be if the transfer-in to the USS it's treated differently in terms of how the benefits can be used. However, I can't see anything on the website saying that is the case.

I'm fairly sure you can do this, but I eventually landed on sticking to the original approach you've gone for.  I think purely monetarily the case is thre for a double transfer, but the extra timing stress just didn't seem worth it to me.

Reasons against:
1. Money transferred in will be subject to ongoing management charges (not a big deal if you're planning to just draw it all out again imminently via TFLS).  

2. Timings become a bit more complex in terms of making sure you have enough time to transfer out and back in before you draw your pension.

Reasons for:

1. Potentially longer period of your funds remaining in the IB and having reduced/zero fees.

Thanks very much for the reply. Those were pretty much my thoughts. I think it might take me 3 to 4 years to build the pot back up. Then I will have 5 years or so where I am looking at partial retirement and not making contributions. So there are quite a few uncertainties. I am leaning towards risking the double transfer nearer the time.