Pension change - USS and TPS - shine some light please

ElmoR

The good news is that I start a new job soon. Am nearing 55, was originally thinking of early retirement at 60 but if I like my new job, who knows, maybe I will keep going? My state pension contributions will be 'full' at age 60 too (worked abroad, hence the slightly slow completion there).

The complexities kick in around the pension scheme and what to decide. I have to work out the numbers: currently with the USS with part DB, part DC, some from final salary years with lucrative AVCs (still ticking along and set up in 2001 - big thank you to younger me) and there's the option to join the TPS, all DB, or stay with USS. Bit of a conundrum in that the final salary AVCs are rare/worth a lot (I think?), yet the USS DC pot is not doing fantastically in the current conditions.

Further thoughts swirling round my head:

I currently do salary sacrifice, TPS does not allow but you can opt for higher accrual rate and one is the same level I currently salsac, so they cancel out?

Death/family benefits - change scheme, leaves you vulnerable for 2 years?

Can I take the USS DC pot and put it into additional contributions for TPS DB? How do I work out the consequences of that if it is possible? It's not clear on the TPS website, and I'm not a member yet, so cannot get into their calculators either.

Are there others out there on the forum who have switched scheme mid career? USS to TPS? Or not made the switch while it was an option?

I almost certainly need an IFA, are there ones who specialise only in pensions? Would this count as 'retirement planning' category on their search website? Any ideas what a typical fee might be? 1 to 2 % here would be a headache to work out with 2 very different pots/schemes? Or am I over thinking this?

Many thanks, Elmo

hyubh

ElmoR said:

My state pension contributions will be 'full' at age 60 too (worked abroad, hence the slightly slow completion there).

An aside, but presumably you say that having got a state pension forecast...? Perfectly possible you will have reached the single tier maximum by 60, though a major reason for it taking 'longer' will have been contracting out of the old state second pension before 2016, by virtue of being a USS member.

The complexities kick in around the pension scheme and what to decide. I have to work out the numbers: currently with the USS with part DB, part DC, some from final salary years with lucrative AVCs (still ticking along and set up in 2001 - big thank you to younger me) and there's the option to join the TPS, all DB, or stay with USS. Bit of a conundrum in that the final salary AVCs are rare/worth a lot (I think?)

If you're referring to an old added years AVC, the final pensionable salary for it is stuck at 31/3/16 (i.e. not actual date of leaving), even when the contract was still ongoing at that point. Were you to stop contributing before the contract's end date, then you would get the added years originally intended, pro rated (and against your final pensionable salary as at 31/3/16). 

https://www.ed.ac.uk/files/atoms/files/schemechangesanupdate_aug_15.pdf
https://www.pensions-ombudsman.org.uk/sites/default/files/decisions/PO-13688.pdf

I currently do salary sacrifice, TPS does not allow but you can opt for higher accrual rate and one is the same level I currently salsac, so they cancel out?

The TPS has separate options for pulling forward your normal pension age and buying additional pension. 

Death/family benefits - change scheme, leaves you vulnerable for 2 years?

Willing to be corrected, but I don't think TPS death benefits require two years service. And either way, don't overdo the difference in USS death benefits between death in service vs. death in deferment:

https://www.uss.co.uk/for-members/life-events/what-happens-when-you-die

Can I take the USS DC pot and put it into additional contributions for TPS DB? How do I work out the consequences of that if it is possible? It's not clear on the TPS website, and I'm not a member yet, so cannot get into their calculators either.

You could transfer out the DC part only, DB part only, or both. Any of these options would be a 'non-Club transfer' into the TPS purchasing additional pension in it (the process would be, you get a quotation first, then decide to proceed or not).

Are there others out there on the forum who have switched scheme mid career? USS to TPS? Or not made the switch while it was an option?

Notwithstanding the recent USS reverse ferret, the TPS seems clearly the more generous scheme to me, even with the odd thing in the USS' favour. No cap on DB pensionable pay, clearly superior accrual rate, uncapped increases... The fact some of your USS benefits carry a lower NPA would seem a reason not to transfer the USS pension, given your semi-preference for retiring at 60, rather than not moving into the TPS at all.

I almost certainly need an IFA, are there ones who specialise only in pensions? Would this count as 'retirement planning' category on their search website? Any ideas what a typical fee might be? 1 to 2 % here would be a headache to work out with 2 very different pots/schemes? Or am I over thinking this?

I honestly think that would be a waste of money, given the DB-to-DB context (this is not what IFAs specialise in). You need to look at the different benefit structures yourself.