USS pension (hybrid DB/DC scheme) - how much do I need?

Simes122

What_time_is_it said:

Thanks @Simes122
I'll factor that in too. Sounds like a good trade off though - 10 extra years of DB pension at a cost of 30% of the annual value.

I think they are fair ERFs.  I’m going at 59 and I modelled that I’d need to live to my late eighties early 90s before the ERF would adversely affect me.  

Cornish_mum

Hello, I am also USS, and have very similar goals (ER at 58-60 on 2.5k/ month). I found the pension modeller on the website not terribly helpful because it makes a lot of assumptions that don’t mesh with what I actually want to do, including the 25% cap on AVCs. (Build up a base DB pot to cover basic income from NRA combined with SP & a DC pot and ISA investments to bridge going 10 years early. I plan to follow ideas on here and transfer out my DC pot a few years pre-retirement so I can decouple part of my DC pot from my DB.)

So I built a spreadsheet of my year by year predicted pot values (DC, DB, SP and ISAs). I work in today’s money (so use expected growth- expected inflation for my compounding). I monitor where I am compared to “the plan” ~quarterly  and try to up contributions when I am off-target (which effectively means buying more units when the market is down if I can). The post 2022 changes radically altered my spreadsheet to the extent I can currently no longer afford to take the TFLS. (I have kept the old one in case the  scheme reverts  back to the previous rules🤞).  

CM

Simes122

Cornish_mum said:

Hello, I am also USS, and have very similar goals (ER at 58-60 on 2.5k/ month). I found the pension modeller on the website not terribly helpful because it makes a lot of assumptions that don’t mesh with what I actually want to do, including the 25% cap on AVCs. (Build up a base DB pot to cover basic income from NRA combined with SP & a DC pot and ISA investments to bridge going 10 years early. I plan to follow ideas on here and transfer out my DC pot a few years pre-retirement so I can decouple part of my DC pot from my DB.)

So I built a spreadsheet of my year by year predicted pot values (DC, DB, SP and ISAs). I work in today’s money (so use expected growth- expected inflation for my compounding). I monitor where I am compared to “the plan” ~quarterly  and try to up contributions when I am off-target (which effectively means buying more units when the market is down if I can). The post 2022 changes radically altered my spreadsheet to the extent I can currently no longer afford to take the TFLS. (I have kept the old one in case the  scheme reverts  back to the previous rules🤞).  

CM

What advantage do you see in taking out part of the DC pot if you don’t mind me asking?  As I understand it, and from what USS have told me, is that what’s left after taking your pension and LS remains uncrystallised and can be transferred out after - what is the advantage of moving it before given fees are covered under USS?

OldScientist

What_time_is_it said:

Thanks @tomatillo.
I'm taking the, perhaps optimistic view, that the recent changes to USS will be reversed so that it reverts to a 1/75th scheme with no inflation cap. 
I'd like to have an income at retirement of perhaps £2k - £2.5k per month after any taxes. Anything above that would be a bonus really. Don't want to leave anything behind either!

The info at https://en.wikipedia.org/wiki/Universities_Superannuation_Scheme is, as far as I can tell, an accurate summary of changes to USS since 2011. For example, final salary pension closed to new members in 2011 (and existing members in 2016) while benefits prior to 2011 are fully index linked.

Hopefully, the higher funding ratio will allow USS to retain the rather odd full indexation to 5% with half indexation to inflation of 15% in use since 2011 (i.e. this year benefits were uprated by 7.5% since inflation was 10%).

Cornish_mum

Hi just replying, I want to take some of the DC pot early and to manage that alongside my ISA accounts (on the same platform) but defer taking the DB and rest of DC (to maximise my DB TFLS) until nearer retirement age. This is because I prefer to have a flexible income when I am younger and able to manage it/take on side work but a larger guaranteed income when I older (ie not to have so much actuarial reduction on my DB). However, I am so far out the scheme rules and my own preferences our very likely to change.  CM