USS IB - worth transferring to a SIPP?

Pythagorous

I have a sizeable pot in the USS Investment Builder from AVC contributions over the years. I also have a Vanguard SIPP. The investment pots are big enough now that I need to think more carefully about maximising my risk-adjusted returns, diversification and appropriate asset allocation.

USS IB is great in that there are zero % fees (at least that's my understanding) which is a big plus given even small fees will compound and eat away at your pot over time. However, there do seem to be limited funds available and they don't seem to have performed particularly well over time. 

I'm curious if anyone on here has any general thoughts on moving money from the USS IB to a SIPP such as the Vanguard one I have. Yes, there will be fees with the SIPP (although Vanguard's are very low, at about 0.4% from my understanding), but I could possibly manage to get better diversification, a better choice of funds and maybe better risk-adjusted returns overall by switching.

Obviously planning on taking expert advice on this at some point, but looking for general thoughts at the moment. Thanks all!

El_Torro

If your USS IB pension really has zero fees (no fund fees? no platform fees either?) then this is a big plus and you should consider whether it's worth losing out on this benefit. Vanguard fees are relatively low (though may not be the cheapest, depending on how big your USS pension is) but there is still a cost.

I am not familiar with the options within a USS pension. If it really has underperformed in recent years then it's worth understanding why. Essentially it's worth knowing what the fund is actually invested in and if you're comfortable with that asset allocation. As always past performance should not be used as an indicator for future performance, the important thing is that it is invested where you want it to be invested.

More choice of funds is not always a good thing, though if your USS pension is invested in areas that are expected to underperform in future years then yes, it's worth considering.

ussdave

There are two recent USS threads worth reading through as they both will help with your decision.

What kind of figures in RB and IB are we talking about?  And how far from retirement are you?

Albermarle

However, there do seem to be limited funds available and they don't seem to have performed particularly well over time. 

When comparing investment funds you need to be sure you are comparing like with like.

For example more cautious type funds will grow more slowly in the long term, than more aggressively invested funds. However the latter can gyrate around scarily in the short and medium term.

Normally you would expect all simple multi asset funds with say 60% equities to perform similarly, but there can be some differences but not usually that significant.

So you need to look into the detail a bit more, before being able to sensibly compare performance.

Pythagorous

ussdave said:

There are two recent USS threads worth reading through as they both will help with your decision.

What kind of figures in RB and IB are we talking about?  And how far from retirement are you?

Thanks will try to find them. About £150K in each. 11 years to retirement, but i have other funds and pension so don't have to necessarily draw down the DC pots straight away (although I likely will be dipping into them at a significant level)

ussdave

Pythagorous said:

ussdave said:

There are two recent USS threads worth reading through as they both will help with your decision.

What kind of figures in RB and IB are we talking about?  And how far from retirement are you?

Thanks will try to find them. About £150K in each. 11 years to retirement, but i have other funds and pension so don't have to necessarily draw down the DC pots straight away (although I likely will be dipping into them at a significant level)

Sorry, I meant what are your Retirement Builder benefits accrued so far (and/or what are they predicted to be at the point of retirement).

I was on my phone earlier so didn't want to drag out links to the other threads.  Here you go:

https://forums.moneysavingexpert.com/discussion/6498146/uss-increase-lump-sum-or-not

https://forums.moneysavingexpert.com/discussion/6499798/uss-pension-fees-more-expensive-than-my-vanguard-sipp-fees

edit: I'd guess that it's likely that you're on track to significantly go over the maximum tax free amount for the combined USS/IB PCLS.  Assuming that's true then I think your likely options are:

1. Transfer it out to a SIPP as you've said (worthwhile if you will have an opportunity to replenish the Investment Builder to the maximum level *and* you have a need/want to delay your USS pension via bridging to avoid ERFs).

2. Leave it where it is to take advantage of the subsidised charges.  When you draw your USS pension you will be able to take the maximum combined tax free amount, with the remaining IB funds remaining uncrystallised and at that point can be drawn in a similar way to having a separate SIPP with its own 25% tax free amount.

What funds are you invested in?  I'm in the global equities fund near 100% and whilst the growth hasn't been staggering it doesn't seem awful.

Pythagorous

ussdave said:

Pythagorous said:

ussdave said:

There are two recent USS threads worth reading through as they both will help with your decision.

What kind of figures in RB and IB are we talking about?  And how far from retirement are you?

Thanks will try to find them. About £150K in each. 11 years to retirement, but i have other funds and pension so don't have to necessarily draw down the DC pots straight away (although I likely will be dipping into them at a significant level)

Sorry, I meant what are your Retirement Builder benefits accrued so far (and/or what are they predicted to be at the point of retirement).

I was on my phone earlier so didn't want to drag out links to the other threads.  Here you go:

https://forums.moneysavingexpert.com/discussion/6498146/uss-increase-lump-sum-or-not

https://forums.moneysavingexpert.com/discussion/6499798/uss-pension-fees-more-expensive-than-my-vanguard-sipp-fees

Thank you very much :-).

Currently accrued 12k pa and as I'm basically at the new sal threshold of 70k and with the new 75ths accrual I should be accruing close to 1k pa (unless of course things change). Hence aiming to have a uss RB pension of ~23k in 11 years time (ignoring inflation). 

ussdave

Pythagorous said:

ussdave said:

Pythagorous said:

ussdave said:

There are two recent USS threads worth reading through as they both will help with your decision.

What kind of figures in RB and IB are we talking about?  And how far from retirement are you?

Thanks will try to find them. About £150K in each. 11 years to retirement, but i have other funds and pension so don't have to necessarily draw down the DC pots straight away (although I likely will be dipping into them at a significant level)

Sorry, I meant what are your Retirement Builder benefits accrued so far (and/or what are they predicted to be at the point of retirement).

I was on my phone earlier so didn't want to drag out links to the other threads.  Here you go:

https://forums.moneysavingexpert.com/discussion/6498146/uss-increase-lump-sum-or-not

https://forums.moneysavingexpert.com/discussion/6499798/uss-pension-fees-more-expensive-than-my-vanguard-sipp-fees

Thank you very much :-).

Currently accrued 12k pa and as I'm basically at the new sal threshold of 70k and with the new 75ths accrual I should be accruing close to 1k pa (unless of course things change). Hence aiming to have a uss RB pension of ~23k in 11 years time (ignoring inflation). 

I added a fair bit above in an edit.  Just highlighting in case you miss it

Pythagorous

ussdave said:

Pythagorous said:

ussdave said:

Pythagorous said:

ussdave said:

There are two recent USS threads worth reading through as they both will help with your decision.

What kind of figures in RB and IB are we talking about?  And how far from retirement are you?

Thanks will try to find them. About £150K in each. 11 years to retirement, but i have other funds and pension so don't have to necessarily draw down the DC pots straight away (although I likely will be dipping into them at a significant level)

Sorry, I meant what are your Retirement Builder benefits accrued so far (and/or what are they predicted to be at the point of retirement).

I was on my phone earlier so didn't want to drag out links to the other threads.  Here you go:

https://forums.moneysavingexpert.com/discussion/6498146/uss-increase-lump-sum-or-not

https://forums.moneysavingexpert.com/discussion/6499798/uss-pension-fees-more-expensive-than-my-vanguard-sipp-fees

Thank you very much :-).

Currently accrued 12k pa and as I'm basically at the new sal threshold of 70k and with the new 75ths accrual I should be accruing close to 1k pa (unless of course things change). Hence aiming to have a uss RB pension of ~23k in 11 years time (ignoring inflation). 

I added a fair bit above in an edit.  Just highlighting in case you miss it

Thank you again! Dashing out shortly. Will need to digest this later. I'm 100% in the Growth fund, which is quite aggressive.

ussdave

Pythagorous said:

ussdave said:

Pythagorous said:

ussdave said:

There are two recent USS threads worth reading through as they both will help with your decision.

What kind of figures in RB and IB are we talking about?  And how far from retirement are you?

Thanks will try to find them. About £150K in each. 11 years to retirement, but i have other funds and pension so don't have to necessarily draw down the DC pots straight away (although I likely will be dipping into them at a significant level)

Sorry, I meant what are your Retirement Builder benefits accrued so far (and/or what are they predicted to be at the point of retirement).

I was on my phone earlier so didn't want to drag out links to the other threads.  Here you go:

https://forums.moneysavingexpert.com/discussion/6498146/uss-increase-lump-sum-or-not

https://forums.moneysavingexpert.com/discussion/6499798/uss-pension-fees-more-expensive-than-my-vanguard-sipp-fees

Thank you very much :-).

Currently accrued 12k pa and as I'm basically at the new sal threshold of 70k and with the new 75ths accrual I should be accruing close to 1k pa (unless of course things change). Hence aiming to have a uss RB pension of ~23k in 11 years time (ignoring inflation). 

Okay, with those figures the maximum TFLS you could get over and above the standard 3 x RB amount is (RB * 3.6667 = ~£84,334).  For the sake of simplicity let's assume you've still got £150,000 in your IB at the time of retirement.

So this means if you draw your RB benefits at the same time as your IB your total package would be:

£23,000/year RB benefits
£69,000 PCLS / TFLS from your RB benefits
£84,334 PCLS / TFLS from your IB
Remaining £65,666 uncrystallised in your IB - which you could transfer to a SIPP or drawn down via PCLS.  25% of that would also be tax free.

Obviously you don't *have* to take the above option for how you draw on your IB, but it is usually regarded as the most tax efficient.

So I think the presented options above are applicable.  If you think you'll want some of the IB funds before you want to draw your RB benefits I'd consider transferring out (you have to transfer the whole pot, no partial transfers) and then make sure contribute enough to get it back to the £85,000 (ignoring inflation) before you retire.  If you don't care about accessing those funds earlier then it's probably sensible (from a charges point of view) to leave them in the IB.  

As per above, I didn't think that the USS funds were particularly poorly regarded (at least things like global equities) but someone more knowledgeable might comment otherwise.

Cornish_mum

Hi just wanted to pop by, as I am at a very similar stage 11k in RB (to date), ~15 years until I can access and building up a substantial IB pot plus separate investments in Vanguard (S&S ISA). 

I have had similar concerns about fund performance within USS. So far performance doesn’t seem terrible (and comparable to Vanguard when comparing like for like). 

If you dig into the information for IFAs factsheets you can get alot of details about the underlying investments in each of the funds, which I found in general to be quite reassuring. I will follow this thread with interest, as I still do worry about this; as we our a dual USS family and our pension contributions are a substantial. 

CM