USS - Increase lump sum or not?

PJM_62

PJM_62 said:

@Simes122 thanks for taking the trouble to expain (and type) all that.  Very useful.  I'm going to go through it step by step to see it in action with my figures.
I hope to move to another (more expensive) house during next 12 months , so need to find best way of getting max TFLS along side my 8k pension.
 

@Simes122
So ive been through your post with my figures .
And for preserving full IB pot (your example B ) , i would be in position of 8.3k pension dropping to 7.3, with RB LS increasing from 25k to 49k.  So 1k less pension buys me 24k.
Or , I could stick with my 8.3k and go for 3x + 3.66x(from IB ).   Approx (25)+(30) = 54k TFLS

Now to figure out best way to do it.  Both ways offer around 50k towards future house purchase. 
I'm swayed towards sticking with the unreduced pension. That 1k difference, is 1k that is guaranteed to be there every year, increased each year with cpi too.
If I preserve all my IB, thats all of it continuing to be exposed to a hit on the (do it for me) investments.
Feels a bit safer getting 30k out of the IB tax free, + the full pension.

Be interested to hear the thoughts of the other USS-ers.

Simes122

PJM_62 said:

PJM_62 said:

@Simes122 thanks for taking the trouble to expain (and type) all that.  Very useful.  I'm going to go through it step by step to see it in action with my figures.
I hope to move to another (more expensive) house during next 12 months , so need to find best way of getting max TFLS along side my 8k pension.
 

@Simes122
So ive been through your post with my figures .
And for preserving full IB pot (your example B ) , i would be in position of 8.3k pension dropping to 7.3, with RB LS increasing from 25k to 49k.  So 1k less pension buys me 24k.
Or , I could stick with my 8.3k and go for 3x + 3.66x(from IB ).   Approx (25)+(30) = 54k TFLS

Now to figure out best way to do it.  Both ways offer around 50k towards future house purchase. 
I'm swayed towards sticking with the unreduced pension. That 1k difference, is 1k that is guaranteed to be there every year, increased each year with cpi too.
If I preserve all my IB, thats all of it continuing to be exposed to a hit on the (do it for me) investments.
Feels a bit safer getting 30k out of the IB tax free, + the full pension.

Be interested to hear the thoughts of the other USS-ers.

For me it’s a tax issue.  First world problem but in Scotland, my DB pensions make me a HR taxpayer.  By lowering my DB pension a little to the benefit of my DC, allows me to avoid tax on 25% of that money.  On the RB side I’m hit with 42%, on the DC, 25% tax free, and 42% on the balance.  While the capped CPI increases exist in the RB side, there is the potential for a greater upside on the DC side, or hopefully CPi level increases.  On the downside, there is the risk of dips too, but my situation is that I’ve got good security on the DB side generally and 25k extra tax free via this option, while preserving 100% of my DC pot. 

UncleTomCobley

bluenose1 said:

Grant1968 said:

bluenose1 said:

Thanks for the update ussdave.
i have been in touch with USS  today to ask can I take my pension from beginning of Feb 24 rather than have the much reduced ERF from April 24.
The quote I have previously received to take my pension from April 24 is based on current ERF rates so not correct.
Not sure if USS are advising members who now have incorrect quotes or it will be a nasty shock when they get their payments.

Did the really tell you that the official, hardcopy quote (not online modeller) was using the wrong rates? Just when you thought things could not get any worse....

The quote I received was sent about a month ago so wouldn’t have included the new ERF rates.
I just want to get mine in payment asap now as have already retired and was only holding out for the increased lump sum due to the  £215 x3 and cost of living rise.
At least I can take it now and not have the ERFs reduced, so luckier than most.

Just on the early retirement factors used in the calcs - I got a quote in the post today (dated 24/01/24) for an age 60 retirement at the start of this April. Still seems to use the old rates. It has the Retirement Income Builder (pension to lump sum) conversion factor as 22.6762 (which looks like the combination of the two pre 1 April, age 60 figures).

Things a bit up in the air now for me - should I start the pension on 31 March and suffer the few days' reduction I wonder. Who can tell?

 

As an aside, the quote didn't mention the £215.

swindiff

swindiff said:

swindiff said:

Email from USS

I refer to your recent emails which have been forwarded from your employer regarding the new Benefit Calculator.

I can confirm that we were aware of an issue with the modeller which meant it was providing incorrect results. This was due to the factors regarding early retirement which had been programmed into the calculator.

 As of 18th January, a fix has been completed on the modeller and so, the results from this date should now be accurate.

 Please accept my apologies for the discrepancies. If you require any further information, please do not hesitate to contact us.

My Response

Thanks for your reply.  

The figure for 60Y and 0M still does not look right.  I would expect the biggest increase to be between 59Y 11M and 60Y 0M.  As 60 is the age at which I can retire without actuarial reduction being applied to much of my older pension.  The figures imply that actuarial reduction is still being applied to all my pension at 60, and then being removed at 60Y 1M?

As has been said it will all change again from April so not that bothered, and would obviously work to 60y 1M if I had to, but it still does not seem correct to me.

Latest response from USS with regards to this

Dear Mr ******

Thank you for providing screenshots of your various benefit projections produced using the benefit calculator.

I believe that the jump in benefits at 60y1m may be to do with employer consent assumptions that should be kicking in at age 60y0m, however it will take us some time to determine whether this is the case.

Please bear with us while we look into this issue for you.

They have fixed this issue in the modeller now (at least for me)
The step change is now at 60, as expected.  Not 60 and 1 month

bluenose1

UncleTomCobley said:

bluenose1 said:

Grant1968 said:

bluenose1 said:

Thanks for the update ussdave.
i have been in touch with USS  today to ask can I take my pension from beginning of Feb 24 rather than have the much reduced ERF from April 24.
The quote I have previously received to take my pension from April 24 is based on current ERF rates so not correct.
Not sure if USS are advising members who now have incorrect quotes or it will be a nasty shock when they get their payments.

Did the really tell you that the official, hardcopy quote (not online modeller) was using the wrong rates? Just when you thought things could not get any worse....

The quote I received was sent about a month ago so wouldn’t have included the new ERF rates.
I just want to get mine in payment asap now as have already retired and was only holding out for the increased lump sum due to the  £215 x3 and cost of living rise.
At least I can take it now and not have the ERFs reduced, so luckier than most.

Just on the early retirement factors used in the calcs - I got a quote in the post today (dated 24/01/24) for an age 60 retirement at the start of this April. Still seems to use the old rates. It has the Retirement Income Builder (pension to lump sum) conversion factor as 22.6762 (which looks like the combination of the two pre 1 April, age 60 figures).

Things a bit up in the air now for me - should I start the pension on 31 March and suffer the few days' reduction I wonder. Who can tell?

 

As an aside, the quote didn't mention the £215.

I am taking mine before 1st April so as not to lose out on the changes to ERF. Ridiculous that the quotes still don’t reflect revised ERF rates, these are big decisions we are making without the correct information.
Worth contacting them for a quote on taking it end of March and beginning of April so you can decided, if you can get correct rates!!!!

Beckster1964

bluenose1 said:

UncleTomCobley said:

bluenose1 said:

Grant1968 said:

bluenose1 said:

Thanks for the update ussdave.
i have been in touch with USS  today to ask can I take my pension from beginning of Feb 24 rather than have the much reduced ERF from April 24.
The quote I have previously received to take my pension from April 24 is based on current ERF rates so not correct.
Not sure if USS are advising members who now have incorrect quotes or it will be a nasty shock when they get their payments.

Did the really tell you that the official, hardcopy quote (not online modeller) was using the wrong rates? Just when you thought things could not get any worse....

The quote I received was sent about a month ago so wouldn’t have included the new ERF rates.
I just want to get mine in payment asap now as have already retired and was only holding out for the increased lump sum due to the  £215 x3 and cost of living rise.
At least I can take it now and not have the ERFs reduced, so luckier than most.

Just on the early retirement factors used in the calcs - I got a quote in the post today (dated 24/01/24) for an age 60 retirement at the start of this April. Still seems to use the old rates. It has the Retirement Income Builder (pension to lump sum) conversion factor as 22.6762 (which looks like the combination of the two pre 1 April, age 60 figures).

Things a bit up in the air now for me - should I start the pension on 31 March and suffer the few days' reduction I wonder. Who can tell?

 

As an aside, the quote didn't mention the £215.

I am taking mine before 1st April so as not to lose out on the changes to ERF. Ridiculous that the quotes still don’t reflect revised ERF rates, these are big decisions we are making without the correct information.
Worth contacting them for a quote on taking it end of March and beginning of April so you can decided, if you can get correct rates!!!!

Yes, I’m doing the same; was planning to start drawing my pension later in the year but the revised ERF has brought it forward for me.

PJM_62

31 March for me too, for Flexi retirement.
They've confirmed that as I'll still be working and contributing after that date. I'll get the 215 uplift+ 645 LS,  paid on first pension payday - 21st April.

bluebirdy

PJM_62 said:

31 March for me too, for Flexi retirement.
They've confirmed that as I'll still be working and contributing after that date. I'll get the 215 uplift+ 645 LS,  paid on first pension payday - 21st April.

I hope you’ll keep reporting back to let us (OK, just me then!) know how it goes - it will be helpful to ‘see’ flexi retirement in action and hopefully you won’t get too clobbered by the ERF changes.

PJM_62

bluebirdy said:

PJM_62 said:

31 March for me too, for Flexi retirement.
They've confirmed that as I'll still be working and contributing after that date. I'll get the 215 uplift+ 645 LS,  paid on first pension payday - 21st April.

I hope you’ll keep reporting back to let us (OK, just me then!) know how it goes - it will be helpful to ‘see’ flexi retirement in action and hopefully you won’t get too clobbered by the ERF changes.

WEF 31 March, so not clobbered by new factors.

For me the reductions are not too painful.
If I retired now but didn't take pension, at 66 I'd get unreduced benefits of about 12k a year.
Retiring or Flexi retiring ,and taking them now at 58 it would drop to 10k.

Wait 8 more years for 12k, or start getting 10k a year now? 
I'm doing 80% flex, so it'll be 8k + 3 days pay, for a year or 2, before final flex and taking the other 20% (2k).

+ the 6.66x TFLSs at each flex.

bluebirdy

Yeah I’m still trying to get my head round what post-flex accrual looks like - because I need to work out exactly when I/we will have enough to live on.

So if you’re going down to 0.6 FTE salary but flexing to 80% of pension, is future accrual calculated as 0.6 of 1/75th (post April) FTE salary?