USS IB - worth transferring to a SIPP?

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). 

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.

Thank you for this.

Can you explain where the RB * 3.6667 = ~£84,334 calc comes from, please? My understanding is that the TFLS is calculated as 25% of your total pension benefits where annual pensions are valued at 20 times. Subject to a current cap of £268,275. So in my example above the total pension value at retirement would be 23k*20(RB pension value)+69K(RB TFLS)+150K(USS IB)+150K(Vanguard SIPP)=829K. Hence I would be able to take out 829k*25%=207.25K as TFC (the 268K limit hasn't been reached). My (likely flawed) understanding is 69K would come from the RB TFLS, leaving 138.25k which I can take out as TFC from either the USS IB or the SIPP. Is this incorrect?

Pythagorous

Cornish_mum said:

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

Have you spoken with an IFA? 

I haven't looked into the USS fund performances in detail. Just had colleagues mention they thought it was poor (on a risk-adjusted basis) and a quick look at it, seems to imply this is maybe correct (although its difficult to properly understand the true risks of different funds for comparisons). Also, my understanding is they are all actively managed funds as opposed to passive index funds and the majority of active managed funds tend to underperform passive indexes in the long term (although maybe this is due in part due to fees which aren't applicable here).

ussdave

Pythagorous said:

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). 

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.

Thank you for this.

Can you explain where the RB * 3.6667 = ~£84,334 calc comes from, please? My understanding is that the TFLS is calculated as 25% of your total pension benefits where annual pensions are valued at 20 times. Subject to a current cap of £268,275. So in my example above the total pension value at retirement would be 23k*20(RB pension value)+69K(RB TFLS)+150K(USS IB)+150K(Vanguard SIPP)=829K. Hence I would be able to take out 829k*25%=207.25K as TFC (the 268K limit hasn't been reached). My (likely flawed) understanding is 69K would come from the RB TFLS, leaving 138.25k which I can take out as TFC from either the USS IB or the SIPP. Is this incorrect?

At one point I also shared that understanding but that is closer to the LGPS way of calculating the max TFLS.  USS has a different method.  MPLMPL corrected me in this thread: https://forums.moneysavingexpert.com/discussion/6439958/uss-vs-tps-university-pension-advice-needed

ussdave

Just to add, your Vanguard SIPP is entirely separate in terms of the TFLS for that pot, aside from (I assume) contributing towards the total max TFLS in relation to the old LTA.

That said, I'm not entirely sure how PCLS and TFLS work with regards to the max TFLS as a percentage of the old LTA.  I would imagine there are some edge cases with PCLS in excess of the 268k limit.

Cornish_mum

Hi

No, I have not spoken to an IFA, I have just read the “for IFA information”, and then looked at the underlying funds (from the quarterly report). I agree with your assessment of passive v active funds but am unclear if the difference in performance will on average out-weigh the savings on fees. 

CM

deltrotter

The global equities USS fund is a global tracker as far as I am aware. All for 0% fee.

What other fund do you need and why look elsewhere?

Cornish_mum

Just to add the USS global equity is a mixture of
LGIM Climate Tilted Global Developed Markets Equity (92%)
Blackrock Aquila Connect Emerging Markets (8%).

info from the quarterly report