USS small pot transfer out

SteveC3

Hi. I have a small amount in USS from a couple of years work many years ago. Standard benefits at age 65 in June are TFLS of £1834 with £611/year income, or £3,419 TFLS with £513/year income. LTA value is around £14,000 so I'm guessing that transfer out value will be similar? Given the relatively small amount I'm thinking of transferring out to my AJ Bell private pension that I am already accessing. My wife retires at 60 next year and so there will be a drop in income, so cash at the earlier part of my retirement would be useful as her state retirement doesnt kick in until age 67 and her pension pot is modest. Is this a wise choice?
Many thanks

Marcon

SteveC3 said:

Hi. I have a small amount in USS from a couple of years work many years ago. Standard benefits at age 65 in June are TFLS of £1834 with £611/year income, or £3,419 TFLS with £513/year income. LTA value is around £14,000 so I'm guessing that transfer out value will be similar? Given the relatively small amount I'm thinking of transferring out to my AJ Bell private pension that I am already accessing. My wife retires at 60 next year and so there will be a drop in income, so cash at the earlier part of my retirement would be useful as her state retirement doesnt kick in until age 67 and her pension pot is modest. 

Not necessarily. Why not ask for transfer value and find out for certain?

SteveC3 said:

Is this a wise choice?

Impossible to know based on such limited information, but if you are sure it meets your objectives (both immediate and longer term) then it's worth considering.

Universidad

SteveC3 said:

LTA value is around £14,000 so I'm guessing that transfer out value will be similar?

As Marcon says, you won't know until you ask. 

The CETV is calculated based on what the scheme think it would cost to provide those benefits in future, (factoring how they expect their investments to perform).

I got a USS transfer value about 18 months ago that was about half the LTA value.

But if you're significantly closer to retirement than I am, then you might expect the CETV to be relatively higher.

I would prepare yourself for some disappointment, however, as I've never seen anyone bragging about a CETV from USS.

Also - are you sure the retirement age for your benefits is 65? (When were you in USS?)

SteveC3

Universidad said:

SteveC3 said:

LTA value is around £14,000 so I'm guessing that transfer out value will be similar?

As Marcon says, you won't know until you ask. 

The CETV is calculated based on what the scheme think it would cost to provide those benefits in future, (factoring how they expect their investments to perform).

I got a USS transfer value about 18 months ago that was about half the LTA value.

But if you're significantly closer to retirement than I am, then you might expect the CETV to be relatively higher.

I would prepare yourself for some disappointment, however, as I've never seen anyone bragging about a CETV from USS.

Also - are you sure the retirement age for your benefits is 65? (When were you in USS?)

I started the pension around 2001. They have written to me stating that benefits start in June when I am 65. I was wrong to assume CETV would be close to LTA but I"ll ask for a quote. Thanks

Universidad

SteveC3 said:

I started the pension around 2001. They have written to me stating that benefits start in June when I am 65. I was wrong to assume CETV would be close to LTA but I"ll ask for a quote. Thanks

If it's a properly deferred USS Final Salary pension from 2001 then you might have been able to take those benefits unreduced from age 63.5

Not much you can do about that now if you're on the doorstep of 65.

Maybe get in touch with USS right away and ask them if you take the pension right now, rather than in June, whether it would be unreduced. But it won't make much difference now.

SteveC3

I've just received the transfer value for this pension and it is just over £26k. This seems high to me and I'll almost certainly go for it. I thought transfer values were dismal at the moment?

Marcon

SteveC3 said:

I've just received the transfer value for this pension and it is just over £26k. This seems high to me and I'll almost certainly go for it. I thought transfer values were dismal at the moment?

In the private sector they've dropped dramatically in the last few years, and are now much more 'normal' than the high peak of yesteryear.

SteveC3

Marcon said:

SteveC3 said:

I've just received the transfer value for this pension and it is just over £26k. This seems high to me and I'll almost certainly go for it. I thought transfer values were dismal at the moment?

In the private sector they've dropped dramatically in the last few years, and are now much more 'normal' than the high peak of yesteryear.

Which is why I was surprised to get this value which is a 40x multiplier after deduction of tax free lump sum. I'm 65 this year and so will probably take the £26k and transfer to my A J Bell sipp.

bluenose1

@SteveC3 - that is a very good rate, I would be doing the same in your situation.