USS & part time job

andr3s

Hi, I've been a USS member for about 5 years, till 2009. I have now the option to join again USS through a part time job.

Would I be worse off by contributing through a part time job? My last year would be a part time one rather than a full time.

Thanks for any suggestions or pointers! 

Dazed_and_C0nfused

In what way do you think you could be worse off by contributing more?

Is the pension from your original service based on full time equivalent pay like a lot of final salary schemes?

hyubh

andr3s said:

Hi, I've been a USS member for about 5 years, till 2009. I have now the option to join again USS through a part time job.

Would I be worse off by contributing through a part time job? 

Only to the trivial extent you obviously accrue pension more slowly if part time vs. full time for the same rate of pay.

My last year would be a part time one rather than a full time.

The DB part of the modern USS is CARE, i.e. not final salary, and there's no final salary link for pre-CARE service like Teachers or the LGPS etc. That said, final pensionable salary in the USS back in the day was defined as full time equivalent for part timer anyway (the reckonable service for any part time periods being pro rated). So, part- vs. full-time doesn't (and didn't for your existing USS pension) have any special bearing.

MPLMPL

Your service accrued up to 2009 would be in the final salary scheme. This closed in 2016 so your pension will be based on your salary when you left the scheme (revalued for inflation for each year since then).
New contributions are in the career average earnings scheme and will have no impact in the calculation of your final salary pension. There is no link to final salary scheme (unlike say Teachers Pension Scheme).
Rejoin! A good time to do so as announcements this week point to better accrual (back to 1/75 from 1/85), restoration of previous inflation protection and lower contribution rate (6.1% from 9.8% possibly from 1st Jan 2024).

Universidad

Just in case the (accurate) comments above are not clear enough - there are a lot of final salary schemes which closed, but retained a link. What that meant was that even though you were no longer contributing to the scheme, the actual "final salary" that your pension would be based on was still not determined while you remained with that employer.

When USS closed its final salary scheme, it set your "final salary" in stone as the salary that you had at the point of closure. This move massively and disproportionately disadvantaged younger members of the scheme, such as myself. (I gained my big promotion a few months after the scheme closed.)

However, the good news is that at this point, any damage is done. 

You won't rock the boat of your USS final salary portion by rejoining the current USS incarnation. All you can do is acrue more pension, not upset the apple cart on your previous accrual.

andr3s

Thanks, very helpful comments! 

Is there a limit to how much can I contribute? As things are, I am inclined to contribute 100% of my salary (about 3k), just to boost my pension (as I have another job that pays my bills).

Also, are there any disadvantages that I should be mindful of?

Universidad

andr3s said:

Thanks, very helpful comments! 

Is there a limit to how much can I contribute? As things are, I am inclined to contribute 100% of my salary (about 3k), just to boost my pension (as I have another job that pays my bills).

Also, are there any disadvantages that I should be mindful of?

There is no facility for "Added Pension" in USS - as in, you can't increase the amount of annual pension in the Defined Benefit portion of the scheme (known as "retirement income builder").

You can buy extra DC pension with USS (which is just a pot - known as "Investment Builder")

Although in theory you can contribute 100% of salary, note that if your organisation offers salary sacrifice (depends on the University, IIRC) then you cannot sacrifice down below what would be minimum wage - so in practice you probably cannot contribute that proportion.

There are two main advantages of putting extra money in the the Investment Builder over a personal pension, such as a SIPP: a) the tax advantages of salary sacrifice and b) you don't pay management or admin fees for money you pay into the investment builder.

Oh - there was one disadvantage of rejoining the scheme which I forgot to mention, but which is relevant. As far as I know, you have to take your whole Defined Benefit USS pension at one time - this will be inconvenient/inefficient as your Final Salary portion will have a different normal retirement age than your CARE portion. That means you'll end up taking one early or another late, but either way you'll probably lose out a bit.

On the plus side, one of the vanishingly few places USS is better than other open DB schemes is that you will accrue new pension at the current state pension age, not YOUR state pension age. Currently that's 66, so you'll be able to take it at 66 without reduction, even if your SPA will one day be 68. New accruals will rise as SPA does, but independent of your SPA. 

The portion you have earned to 2009 I'm pretty sure can be taken unreduced at 63.5

andr3s

Universidad said:

You can buy extra DC pension with USS (which is just a pot - known as "Investment Builder")

Although in theory you can contribute 100% of salary, note that if your organisation offers salary sacrifice (depends on the University, IIRC) then you cannot sacrifice down below what would be minimum wage - so in practice you probably cannot contribute that proportion.

Hi, thanks again! Do you know whether you shouldn't go below minimum wage overall (I wouldn't, across my two jobs) or in each job?

Universidad

andr3s said:

Hi, thanks again! Do you know whether you shouldn't go below minimum wage overall (I wouldn't, across my two jobs) or in each job?

I think it would have to be for each job you need to be above minimum wage.