USS Definition

Given the recent changes to USS pension accrual and benefits can anybody please provide me with a USS definition for "retire".

Leaving the scheme, stopping work and retiring all seem to influence decisions differently especially with regard benefit uplift:
Subject to the completion of formal processes to implement the JNC’s proposals, from 1 April 2024, you’ll build up benefits differently and certain eligible members will also receive a one-off uplift to pension benefits. 
From 1 April 2024, you’ll build up benefits differently:
A higher accrual rate for your defined benefit pension
The rate at which you build defined benefits in the Retirement Income Builder will increase.
Currently you get 1/85 of salary (up to the salary threshold) in defined benefit pension each year and 3/85 of salary as a lump sum on retirement. This will increase to 1/75 of salary for pension benefits and 3/75 of salary for the lump sum respectively (for salary up to the salary threshold)
If you are eligible and have any period of active membership in the period 1 April 2022 to 31 March 2024, and you do not retire before 1 April 2024, you’ll receive a £215 uplift to your annual pension, plus an associated £645 retirement lump sum (subject to certain criteria).
If you’ve retired and meet the criteria, you’ll get a pension uplift of £241 per year

Thanks

Mortgage: £200,000 (Sep 2021)                                      Initial MF date: Sep 2031 

Int Rate:
1.19% fixed until Nov 2026 (8.5% follow on rate?)
Cap+Int Repaid: £65100 (32%)  £80,704 (40%) £82468 (40.48%)£89507 (43%) £91267 (44.7%) £98,309 (48.02%)

Target MF date: Nov 2026  Current MF date: Dec 2029,  Nov 2029, Apr 2029, May 2029                                    
Target Int Saving: £25,561 Current Int Saved: £12,350,   £13,421,  £16,991, £17,989, £18,699, £20,495

Overpayments suspended and surplus cash currently being diverted to high interest savings.

Comments

  • Universidad
    Universidad Posts: 301 Forumite
    First Anniversary Name Dropper First Post
    edited 29 February at 11:24PM
    If you've paid in to USS at any time between April 22 and April 24, you will get the uplift.
    Unless:
    • You've taken a refund of your contributions (only possible if you've been a member for under 2 years) or
    • transferred out of the scheme or
    • You've chosen to take an enhanced opt-out of the scheme or
    • You've retired
    Enhanced Opt-Out is a specific thing where you keep the USS insurance elements, but don't accrue further pension.If you've just opted out, full stop, you're still eligible - provided you had some payments in that 2 year range above.
    If you're retired you still get the annual pension uplift, but not the lump sum uplift. Retired in this context means "you are drawing your USS pension"...
    EDIT: Having said the above, the scheme rules define retirement as follows:
    "Retirement" means the cessation, on or after minimum pension age, of employment
    which gives entitlement to membership or the cessation of active membership on the
    grounds of incapacity, without the member taking in either case any other
    employment which would give entitlement to membership, and "Retire" and
    "Retired" have corresponding meanings. A member shall be deemed to retire no
    later than the date which is immediately before the member's 75th birthday;
    That would seem to imply that if you become a deferred member (who is not drawing the pension), but is above the minimum retirement age, then USS considers you to be "retired", even if you're still working somewhere else. Honestly, I'm not sure that's what they're going for - but that's what the scheme rules say.
  • FIREmenow
    FIREmenow Posts: 174 Forumite
    First Post First Anniversary Name Dropper
    Hi, does this bit in the FAQs linked from that page help?

    Who would be eligible for the uplift and how much is it?
    If you have any period of active membership in the period 1 April 2022 to 31 March 2024, and you do not retire before 1 April 2024, you’ll receive a one-off pension uplift of £215, plus an associated £645 retirement lump sum (subject to certain criteria, see “Who won’t get the uplift?” below).  You do not have to have been a member for the whole of this period, and it applies if you are part time, in variable time employment, left the scheme after 1 April 2022 and prior to 1 April 2024 (but did not transfer out or take a refund of contributions) or flexibly retired (but remained active) prior to 1 April 2024.

    If you have any period of active membership from 1 April 2022 to 31 March 2024 and retired before 1 April 2024, you’ll receive a pension uplift of £241.

    If you’re receiving a pension following the death of a loved one who had any period of active membership from 1 April 2022 to 31 March 2024, you’ll receive a pension uplift of £108.

    Who won’t get the uplift?
    If you did not pay in to the scheme at any point during the period 1 April 2022 to 31 March 2024, then you will not receive the uplift. This includes if you were in a period of suspended membership where contributions were not maintained for the whole of this period.  You will also not receive the uplift if you have enhanced opt out status as at 31 March 2024, or have transferred out or took a refund.

    Which leaving scenario are you wanting to check?
  • BikingBud
    BikingBud Posts: 1,729 Forumite
    Photogenic First Post Name Dropper First Anniversary
    Thanks for the responses, Retirement Income Builder as I don't have any investment and have paid in between Mar 21 and Mar 24:
    "Retirement" means the cessation, on or after minimum pension age (Yes), of employment (Yes)
    which gives entitlement to membership or the cessation of active membership on the
    grounds of incapacity, without the member taking in either case any other
    employment which would give entitlement to membership (Yes)

    My reading of that is that when I finish my current job, 31 Mar 24, even if I go on to work elsewhere, but not in a job that is part of USS pension scheme, or I do not immediately claim the pension from USS I am deemed to have "retired" a gateway that comes with resigning and is not moveable. 

    Retirement isn't a decision that relies upon claiming the accrued benefits?

    And as such I will be given the £241 uplift annually and this will be increased by the ever more complex inflationary formulae!

    This then influences the second part of the decision, reduction due to changes for early payment, actuarial reduction, from 1 Apr 24 which according to the enforced point of retirement 31 Mar 24 I am now tied into current factors. Does it therefore make any difference if I claim now or I leave the funds in the pot until NPA? And as I am tied in do I take the largest TFLS with minimum pension to work the lump elsewhere? 

    I'm trying to make sure I capture the factors correctly, i've seen pre and post 2022 early departure factors and the commutation factors and the formulae and they are all over the place (many conditions), nothing is provided with clear terms so that you can determine the baseline payment and do some analysis for interest rates and inflation rates. One might say it is deliberate!

    Might be nothing in it but at least trying to ensure I capture the correct figures and then understand the opportunities and risks.

    £241 with compound inflation of 2.5% makes a difference of approximately £11k over 20 years!

    Mortgage: £200,000 (Sep 2021)                                      Initial MF date: Sep 2031 

    Int Rate:
    1.19% fixed until Nov 2026 (8.5% follow on rate?)
    Cap+Int Repaid: £65100 (32%)  £80,704 (40%) £82468 (40.48%)£89507 (43%) £91267 (44.7%) £98,309 (48.02%)

    Target MF date: Nov 2026  Current MF date: Dec 2029,  Nov 2029, Apr 2029, May 2029                                    
    Target Int Saving: £25,561 Current Int Saved: £12,350,   £13,421,  £16,991, £17,989, £18,699, £20,495

    Overpayments suspended and surplus cash currently being diverted to high interest savings.
  • Universidad
    Universidad Posts: 301 Forumite
    First Anniversary Name Dropper First Post
    edited 3 March at 4:44PM
    I think you need to put these questions to USS urgently. I would not expect your leaving employment (while not accessing your pension) on March 31st to capture the current early retirement factors for some future date. I would expect that the factors will be the ones that apply when you access the pension.
    However, I also wouldn't have expected "retire" to mean "resign without claiming pension".
  • BikingBud
    BikingBud Posts: 1,729 Forumite
    Photogenic First Post Name Dropper First Anniversary
    Thanks @Universidad.  

    I have discussed and asked for a detailed breakdown, especially to state and start from my accrued benefits but yes I was advised as you expect, if I take the pension after 31 Mar 24 and at any point before NPA then the actuarial reduction will apply from the post 1 Apr 24 figures, not sure if they change them again if those new figures will apply. 

    I was also advised that the £241 will not currently show in any quote but will be added once the pension comes into payment ;) 

    Once I get the detailed breakdown I can spreadsheet it to death! Although you do need a PhD in excel the able to work through all the variations and changes that have recently been imposed and then unpicked. 
    However, I also wouldn't have expected "retire" to mean "resign without claiming pension".

    Yes!. I have already queried this with the HR staff, as differing people have differing perspectives and despite having to provide 90 days notice to resign, HR do not do anything🙈🙉🙊, including asking the straightforward question "do you intend to claim your USS pension" until you ask them. Don't you just love it?

    Mortgage: £200,000 (Sep 2021)                                      Initial MF date: Sep 2031 

    Int Rate:
    1.19% fixed until Nov 2026 (8.5% follow on rate?)
    Cap+Int Repaid: £65100 (32%)  £80,704 (40%) £82468 (40.48%)£89507 (43%) £91267 (44.7%) £98,309 (48.02%)

    Target MF date: Nov 2026  Current MF date: Dec 2029,  Nov 2029, Apr 2029, May 2029                                    
    Target Int Saving: £25,561 Current Int Saved: £12,350,   £13,421,  £16,991, £17,989, £18,699, £20,495

    Overpayments suspended and surplus cash currently being diverted to high interest savings.
  • BikingBud
    BikingBud Posts: 1,729 Forumite
    Photogenic First Post Name Dropper First Anniversary
    From USS:

    If you leave any USS eligible employer on or after age 66 you must take your benefits and retire from the scheme. This is because your benefits must become payable from age 66 and cannot be deferred past this point, if you are no longer in employment. 

    If you leave employment before age 66 but after the minimum pension age of 55, you can choose to retire should you wish. This means you can take your benefits from leaving employment but if you take these before age 66, they will incur penalities for early payment. The factors used by USS are on our website at https://www.uss.co.uk/for-members/calculate-your-benefits/factors-used-by-uss.

    You are only deemed to have retired if your benefits are in payment.

    If you stay in employment with a USS eligible employer and reach age 75 you must retire from the scheme and take your pension payments. Reaching age 75 is the only instance in which your USS benefits can be in payment and you can also continue to work at a USS eligible employer.

     So not as defined in the Scheme Rules:s

    Mortgage: £200,000 (Sep 2021)                                      Initial MF date: Sep 2031 

    Int Rate:
    1.19% fixed until Nov 2026 (8.5% follow on rate?)
    Cap+Int Repaid: £65100 (32%)  £80,704 (40%) £82468 (40.48%)£89507 (43%) £91267 (44.7%) £98,309 (48.02%)

    Target MF date: Nov 2026  Current MF date: Dec 2029,  Nov 2029, Apr 2029, May 2029                                    
    Target Int Saving: £25,561 Current Int Saved: £12,350,   £13,421,  £16,991, £17,989, £18,699, £20,495

    Overpayments suspended and surplus cash currently being diverted to high interest savings.
  • Universidad
    Universidad Posts: 301 Forumite
    First Anniversary Name Dropper First Post
    edited 16 March at 4:41PM
    Thanks for posting back, that is interesting. I'm no expert, but it doesn't seem smart for a pension scheme to define "retire" differently for practical applications than it is defined in the scheme rules.
    Though, in my opinion, the definition in the scheme rules is the pretty unintuitive. But perhaps I'm reading it wrong.
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