USS - New Factors ?

PJM_62

USS have sent out an email detailing a new updated set of factors that they will use for members taking early / late retirement.
If anyone has looked at them , and understands them, (I have to admit I dont),
could they advise if its now better or worse for someone age 57 thinking of taking early retirement soon.

PJM_62

https://www.uss.co.uk/for-members/calculate-your-benefits/factors-used-by-uss

ussdave

I was just about to ask for a link as I had failed to find it on the site.  I'm out for the evening but will review later.

FrugalFredi

Can't comment on age 57 but for me, taking it 5 years early, the factor has worsened, from 84% to 82.6%.
Looks like the lump sum to pension commutation factors have improved. At age 60 it's changed from approx 40 to 31.2.

atw_uss

Interesting ... I've been looking at reverse commutation factors today too.

I can't say I understand it for sure, but in my case (soon to retire at 56) it looks like it would mean a rate of 35.40 pre/31.85 post April 2022 to gain extra pension from the TFLS, but for converting MPAVCs it's 27.42, so a little better.

Still not sure if it's worth it, but food for thought ...

Universidad

PJM_62 said:

USS have sent out an email detailing a new updated set of factors that they will use for members taking early / late retirement.
If anyone has looked at them , and understands them, (I have to admit I dont),
could they advise if its now better or worse for someone age 57 thinking of taking early retirement soon.

I don't think they are changing the ERFs for benefits that you have already accrued. The new factors they've published are for benefits accrued from April 2022, and if that is correct then it shouldn't make a huge amount of difference for someone thinking of retiring soon.

See this file here: https://www.uss.co.uk/-/media/project/ussmainsite/files/financial-advisers/mfuss-for-ifa.pdf

The Retirement Factors table in this file clearly distinguishes between "Factor to be applied to benefit accrued prior to 1 April 2022" and "Factor to be applied to benefit accrued from 1 April 2022" - this document is from April 2023 so ought to be accurate and up to date.

What might be more of a consideration for someone thinking of retiring at 57 is what your normal pension age is. From 2011 the scheme aligned the Normal Pension Age with the State Pension Age, but between 1995 and 2011 it would have been 63.5.

MPLMPL

Looks like they have changed ERFs to already accrued benefits. They are slightly less generous than they were Apr 2020 - Mar 2023. Hopefully the comparison of the two below is readable. The table on the left shows what they were for the previous 3 year period.

ussdave

It's a shame they have been eroded (though not shocking given everything else that has happened with USS).

I was under the impression that the ERFs were primarily based on the cost to provide them, so would've expected them to improve given the supposed better performance of USS.  That was clearly silly of me though

PJM_62

I always understood there was a sweet spot, which meant waiting until age 60 before taking ER was beneficial. I don't see anything in those tables which suggests that.

ussdave

PJM_62 said:

I always understood there was a sweet spot, which meant waiting until age 60 before taking ER was beneficial. I don't see anything in those tables which suggests that.

I think that's to do with older members having some protected rights of access to full pension at the age of 60?  Those wouldn't be reflected in these tables but I believe the benefit modeller does show the difference.  Last time I checked for myself there's a hundred or so per year that would gain by taking at 60 vs 59, above any beyond the standard ERF difference.  At 41 I only have a small amount of benefits that were accrued when this ability to access at 60 without reductions was a thing.

PJM_62

I'll take a look at the modeller again.
Being one of the older members, aged 57  
It will probably be a thing I see.

If we hadn't had the Rona Virus I'd have gone already. But this new WFH world is making me struggle to find it in me to press the button.