USS pension to be restored - will my estimated pension go up?

bluenose1

Thanks MPLMPL. 

Very interesting and glad there will be some recompense for the reduced benefits. If I am reading it correctly our DB pensions will be increased by £215 per annum with effect from 1st April 24 with an increased lump sum of £645.
I am retiring 2nd Jan 24, just wondering if I will get the increase in the lump sum retrospectively, or if I should consider deferring getting my pension until April 24, another question for me to ask them I suppose.

MPLMPL

Think it is something you will need to ask. The line about those already retired getting a smaller increase may apply, but unclear as you are not retired yet.
 As an aside, it may be worth considering delaying until April for other reasons. By mid October we will know the September CPI rate which then informs the April pension increase. If you delay until April then you should get this reflected in a slightly larger PCLS (3xDB).
Don't know what your pension is, but e.g. if CPI is 6% then increase will be 5.5% so for a pension of say £20000 PCLS would be £60000 in Jan but £63300 in April. Also slightly higher than this as ERF will have 3 months fewer applied.

bluenose1

MPLMPL said:

Think it is something you will need to ask. The line about those already retired getting a smaller increase may apply, but unclear as you are not retired yet.
 As an aside, it may be worth considering delaying until April for other reasons. By mid October we will know the September CPI rate which then informs the April pension increase. If you delay until April then you should get this reflected in a slightly larger PCLS (3xDB).
Don't know what your pension is, but e.g. if CPI is 6% then increase will be 5.5% so for a pension of say £20000 PCLS would be £60000 in Jan but £63300 in April. Also slightly higher than this as ERF will have 3 months fewer applied.

Good point. MPLMPL, hadn’t thought about that. Think it may be worth considering leaving until April 24 and living off my savings until then. Back to revisit my excel spreadsheet…….

MPLMPL

Having just been asked to vote on the proposals by UCU, I think the statement voted on is clearer, i.e. if you are already retired by April 2024 BUT have some service between 1st April 22 and 31st March 24, you should get the pension increase of £215; however, you won't get the 3 x lump sum payment of £645, you'll get £26 instead. I would still seek confirmation from USS, but would imagine they won't give any information until the changes are confirmed. Pasted below (my italicising).

"As a result, we have agreed a flat-rate pension increase, effective from 01 April 2024:

• of £215 - for active members and the small number of deferred and retired members who had any active service between 1 April 2022 and 31 March 2024;
• of £645 (3 x £215) - the lump sum on retirement of those active and deferred member;
• of £26 - for retired members who had some active service between 1 April 2022-31 March 2024 we would consider an additional payment of £26. This amount represents the equivalent to a flat rate of £215 with the conversion of the lump sum to DB at current rates taking HMRC rules into account as they relate to lump sum payments."

Universidad

MPLMPL said:

• of £215 - for active members and the small number of deferred and retired members who had any active service between 1 April 2022 and 31 March 2024;

FWIW this "small number of deferred ... members" includes everyone who quit the sector over the pension cuts, which included at least 2 people in my team, let alone my organisation.

I don't pretend that my decision here was typical, but I can see why they'd want to downplay it. 

However, if they're not pro-rating the pension increase, then those of us who handed in notice immediately after the cuts went through will disproportionately benefit. 

My thanks to USS for the parting gift, if so.

spiralir

I recently received my Annual Member Statement (Sep 2023) which includes a valuation of my pension benefits and savings on the 31 March 2023. Will USS issue a revised statement when this restoration is implemented?

Separately, I believe that annual pension increases happen on April 1st each year (calculated based on the CPI the previous September). Does this mean that the annual pension given in the the Annual Member Statement changes 1 day later on April 1st?

Thanks.

bluenose1

MPLMPL said:

Having just been asked to vote on the proposals by UCU, I think the statement voted on is clearer, i.e. if you are already retired by April 2024 BUT have some service between 1st April 22 and 31st March 24, you should get the pension increase of £215; however, you won't get the 3 x lump sum payment of £645, you'll get £26 instead. I would still seek confirmation from USS, but would imagine they won't give any information until the changes are confirmed. Pasted below (my italicising).

"As a result, we have agreed a flat-rate pension increase, effective from 01 April 2024:

• of £215 - for active members and the small number of deferred and retired members who had any active service between 1 April 2022 and 31 March 2024;
• of £645 (3 x £215) - the lump sum on retirement of those active and deferred member;
• of £26 - for retired members who had some active service between 1 April 2022-31 March 2024 we would consider an additional payment of £26. This amount represents the equivalent to a flat rate of £215 with the conversion of the lump sum to DB at current rates taking HMRC rules into account as they relate to lump sum payments."

Looks like I should definitely defer 3 months until 1st April 24 for both the advantage of the inflation increase and the increased lump sum. Need to spend an hour looking at my spreadsheet but it seems a no-brainer for me. 

spiralir

MPLMPL said:

For those who haven't seen it, full joint statement from UCU and UUK pasted below.
...
[1] All defined benefits accrued between April 22 and April24, existing or additional, will also be indexed at this rate, as will the defined benefit salary threshold.

Any idea what rate footnote [1] refers to? Is it the higher accrual rate or the September 2023 CPI rate? Does 'indexed' mean 're-indexed'.

MPLMPL

Refers to "Removal of the 2.5% pa cap on pension increases, both before and after retirement, and replacement with the USS standard pension increase (softcap) that was in place before April 2022 [1]"

spiralir

Thanks. I get confused what terms like rate and cap mean, e.g. they are the same or different. Also when USS use dates like 31 March, 1st April, April to refer to dates when calculations are made and/or applied.