SAUL V's USS: I need some clarity and help, please

Lisa_Marie_2

Hello, I need some clarity and help, please.

I have recently changed employer, from one UK University to another UK University.

I have been paying into the SAUL pension scheme for the last 10 years and my new employer has insisted/automatically enrolled me into the USS scheme.

Before starting my SAUL pension, I had another small pension from my first career (10 years) then I was a stay-at-home mother for 11 years. Returning to work part-time for the first five years. I am 53, so only have 14 years or so until I retire.

I'm not sure what to do.

I thought it was better to accumulate a larger amount in one pot, rather than have several small pension pots: Is this the best option or does having several small pensions equate to the same amount upon retirement?  Also, I am being told that SAUL is the best pension by people I work with.

If I want to challenge my current employer, they advised it would be difficult and that I would need to state my case via email.

I don't know much about pensions, I have just always paid in without really thinking about it, so having to choose is difficult and confusing.

Dazed_and_C0nfused

The first thing to remember is that for the period you were a member there is unlikely to be any "pension pot" with SAUL for you to get money from.

It is (or was) a defined benefit scheme where you get a pension based on the scheme rules.  Defined benefits pensions are often considered the gold standard in pension terms.

There is more information here about the pension you will have built up.

https://www.saul.org.uk/#/page/your-pension-worked-out

katejo

Lisa_Marie_2 said:

Hello, I need some clarity and help, please.

I have recently changed employer, from one UK University to another UK University.

I have been paying into the SAUL pension scheme for the last 10 years and my new employer has insisted/automatically enrolled me into the USS scheme.

Before starting my SAUL pension, I had another small pension from my first career (10 years) then I was a stay-at-home mother for 11 years. Returning to work part-time for the first five years. I am 53, so only have 14 years or so until I retire.

I'm not sure what to do.

I thought it was better to accumulate a larger amount in one pot, rather than have several small pension pots: Is this the best option or does having several small pensions equate to the same amount upon retirement?  Also, I am being told that SAUL is the best pension by people I work with.

If I want to challenge my current employer, they advised it would be difficult and that I would need to state my case via email.

I don't know much about pensions, I have just always paid in without really thinking about it, so having to choose is difficult and confusing.

I have been paying into SAUL since 1990. It used to be the case that staff members moving to an academic grade post at another College within University of London could ask to remain with SAUL and not move to USS but this changed roughly 10 to 15 years ago. This put me off seeking a minor promotion because I felt I would lose out by moving. SAUL seemed to be a better option at the time. I assume you have moved from an admin grade post to an academic one?

Universidad

USS does not allow you to transfer in to its defined benefit section. You will therefore in all practical terms not have the option to transfer your DB SAUL pension into USS, as it would go into the DC section (and it would almost certainly not be valuable to do this if it were possible).

You can still accrue defined benefits in USS. So in practical terms you will end up with at least two separate defined benefit pensions. This isn't a bad position to be in, frankly. Having two different DB schemes gives you a bit of flexibility about whether to take them both at the same time, or at different ages. Do you know what your normal pension age with SAUL is?

Having two career average DB pensions doesn't negatively affect their value, as opposed to having one. (This could have been a problem in the days of Final Salary schemes, but both your periods of service post-date those days).

As to whether USS or SAUL is better, both have changed a lot since the point in time when they were competitive DB schemes. Neither are really comparable to the open public sector schemes, such as TPS, at this point.

With the restoration of USS benefits, the USS and SAUL schemes look fairly closely matched, although with SAUL you have to spend 3 years paying into a DC scheme before you will be let into the DB scheme, so that's a huge negative (though it wouldn't have applied to you as a long established member).

It might be worth looking at how to manage the pension from your first career, starting with what type of pension it is. If it's another DB pension, probably not much will need to change, but if it's a DC pension you might want to understand how it's invested and if that suits your needs.

katejo

Universidad said:

USS does not allow you to transfer in to its defined benefit section. You will therefore in all practical terms not have the option to transfer your DB SAUL pension into USS, as it would go into the DC section (and it would almost certainly not be valuable to do this if it were possible).

You can still accrue defined benefits in USS. So in practical terms you will end up with at least two separate defined benefit pensions. This isn't a bad position to be in, frankly. Having two different DB schemes gives you a bit of flexibility about whether to take them both at the same time, or at different ages. Do you know what your normal pension age with SAUL is?

Having two career average DB pensions doesn't negatively affect their value, as opposed to having one. (This could have been a problem in the days of Final Salary schemes, but both your periods of service post-date those days).

As to whether USS or SAUL is better, both have changed a lot since the point in time when they were competitive DB schemes. Neither are really comparable to the open public sector schemes, such as TPS, at this point.

With the restoration of USS benefits, the USS and SAUL schemes look fairly closely matched, although with SAUL you have to spend 3 years paying into a DC scheme before you will be let into the DB scheme, so that's a huge negative (though it wouldn't have applied to you as a long established member).

It might be worth looking at how to manage the pension from your first career, starting with what type of pension it is. If it's another DB pension, probably not much will need to change, but if it's a DC pension you might want to understand how it's invested and if that suits your needs.

I noticed this new rule about SAUL not allowing immediate admission to the DB scheme quite recently and was quite shocked by it.  I thought it was just 2 years not 3 but perhaps this has changed more recently. Fortunately I started SAUL on the final salary scheme well before this change happened.

ussdave

Agreed, pretty shocking and would certainly give me pause if I were potentially looking at a job with a SAUL pension.

hyubh

Universidad said:

Having two career average DB pensions doesn't negatively affect their value, as opposed to having one.

That's only true if in-service and deferred revaluation/increases are the same. Does that hold for the OP...? (To be clear - genuine question!)

Universidad

hyubh said:

That's only true if in-service and deferred revaluation/increases are the same. Does that hold for the OP...? (To be clear - genuine question!)

That's a really good point, though there's no opportunity to do anything about it. 

I don't think there's any difference between in-service and deferred increases in either scheme. There's certainly no CPI+X active revaluation, as with TPS. 

And it looks like the revaluation is similar between USS and SAUL, with the same 5% + 1/2 CPI to 15% soft cap in place.

However, after retirement, it looks like recent (post 2016) SAUL benefits actually have a hard cap at 2.5% CPI.