USS pension scheme - what is the underlying fund they invest in?

ussdave

dllive said:

Thanks - thats good to know. I think Ill contribute more into my SIPP (LifeStrategy100). I will be paying Vanguard management fees, but this will be offset by LifeStrategy's (hopefully!) enhanced performance.

Im going to see what the performance of other pension providers are and see how they compare. 5.8%pa doesnt sound like much when inflation is factored in. Especially this year!

Do you have access to salary sacrifice?  That would give you an immediate large benefit and you could always transfer out of the Investment Builder into your chosen SIPP.

Fairly sure you're already aware of how the TFLS works with USS RB + IB too so I won't bore you with that

dllive

Thanks @ussdave . I did ask the accounts dept and they said they dont offer salary sacrifice on AVCs. I was a bit surprised as Ive heard most universities do.

As far as Im aware, I can take 25% of my IB as cash tax free(?)

ussdave

dllive said:

Thanks @ussdave . I did ask the accounts dept and they said they dont offer salary sacrifice on AVCs. I was a bit surprised as Ive heard most universities do.

As far as Im aware, I can take 25% of my IB as cash tax free(?)

Shame to hear about the lack of salary sacrifice

You can take more of you IB pot as tax free cash than just 25%, assuming you take the pot at the same time as drawing your RB USS benefits.

https://forums.moneysavingexpert.com/discussion/comment/80021381#Comment_80021381

It's worth trying to ensure you have sufficient in your IB pot at the point of retirement to maximise the tax free element from point 1 on the linked post.  If you're concerned about fund performance you could just top up your IB close to retirement instead.

Albermarle

dllive said:

Thanks - thats good to know. I think Ill contribute more into my SIPP (LifeStrategy100). I will be paying Vanguard management fees, but this will be offset by LifeStrategy's (hopefully!) enhanced performance.

Im going to see what the performance of other pension providers are and see how they compare. 5.8%pa doesnt sound like much when inflation is factored in. Especially this year!

Just be aware that most pension investors ( rightly or wrongly) are uncomfortable with the risks/volatility of a 100% equity fund, that could drop up to 40% in a couple of weeks in a big market crash.
So a more middle of the road fund is more suitable for the majority.

OldScientist

dllive said:

Thanks - thats good to know. I think Ill contribute more into my SIPP (LifeStrategy100). I will be paying Vanguard management fees, but this will be offset by LifeStrategy's (hopefully!) enhanced performance.

Im going to see what the performance of other pension providers are and see how they compare. 5.8%pa doesnt sound like much when inflation is factored in. Especially this year!

The growth fund has more than 20% bonds in it (as well as property) - so you are not really comparing like with like. As others have said, the 100% equity funds available at USS have done better than lifestyle100 (the latter may be being held back by the relatively large allocation to the UK). In fact Vanguard's own global equity fund (Global All cap) has done better than lifestyle100 (for 5 years to end of June 2023, 8.4% compared to lifestyle 7.5%). Given similar composition, the only difference will be the fees (platform and funds).

dllive

Hi guys. Ive been thinking about this.

I have another 15 - 20 years before I retire, so Im happy to have more exposure to equities that the current allocation in the Growth Fund.

Rather than the Do It For Me option, if I were to choose the Global Equity Fund for my ongoing AVCs, would that impact what my existing AVCs are invested in (Growth Fund)?

Taking it to its extreme: If I spent 6 months making AVCs to the Sharia Fund, then 6 months paying into the Global Equity Fund, then 6 months later changed back to the Do It For Me option, would each chunk of AVC's stay in their respective funds?

Im primarily thinking of how in - say 10 years - I transition from the Global Equity Fund to their Do It Me option (which would presumably - at that point - would hold more bonds than equities).

Thanks

Doctor_Who

I think you can specify in MyUSS where you want new contributions to go, leaving old contributions alone and invested as you originally planned. Being a deferred member I have no new contributions, but I can still move my IB funds between the different options. I've always used the Let Me Do It option, so I can't comment if you can move between those funds and the ones in the Do It For Me option (and vice versa), however, I would expect you'd be able to do that. Log in to MyUSS and see what you can do!

Im primarily thinking of how in - say 10 years - I transition from the Global Equity Fund to their Do It Me option (which would presumably - at that point - would hold more bonds than equities).

Are you thinking about 'lifestyling'? Moving significantly to bonds as you approach retirement is mainly applicable if you intend to buy an annuity. If you intend to remain invested and drawdown funds then a significant move to bonds may not be a good idea.

dllive

@Doctor_Who Indeed, Im thinking about lifestyling. I dont want to invest in the Global Equity Fund for 20 years and then find out that I can only move to bonds in 1 fail swoop. I suppose what I want to do is something like the Vanguard Target Retirement, albeit manually.
... or Im making life complicated for myself and I should just stick with the Do It For ME Option!! After all, I do have a SIPP which is all in equities.

Doctor_Who

The Do It For Me option might be right if you plan to buy an annuity with your IB funds. This was never my plan since the DB pension (and the SP) will provide a very good indexed income, hence I chose the Let Me Do It option (I also have a SIPP that I'm drawing down now until the DB pension starts). You could manually move funds each year from equities to bonds in the Let Me Do It option as you approach retirement, but you'd need to remember to do this! I think having a plan of when you'll need the money (55/57/60/65 etc) and what you would do with it when you get there (drawdown/annuity etc) might help you decide where's best to invest now.

Albermarle

The Do It For Me option might be right if you plan to buy an annuity with your IB funds

I think most providers now offer more than one  lifestyling option, so could be  one with a view to drawing down, rather than taking an annuity.

I am not familiar though with what is available in this particular pension.