USS Error and where to get advice?

RSTime

So, I put in for retirement and received confirmation of my retirement benefits. To my surprise, the benefits were different to the estimate I received in May. The pension is £1,500 more per annum and lump sum £26,517 less.

I really have no confidence in how the USS calculate my pension and not sure what to do next? Has anyone else had a similar experience?

FIREmenow

The commutation factor on 26,517 / 1500 = 17.678. This looks to perhaps be a conversation of pension to lump sum in your older forecast, which has been removed in your newer one? A factor around 17 fits if you are early 60s. The factor to have exchanged lump sum for pension in the new forecast would only work if you are late 60's.

I don't think it can just be early retirement factors, as I think the lump sum would remain closer to 3x.

What exactly did you ask to be forecast in your older statement, and what exactly did you ask for in the newer one? Did you ask for more lump sum or more pension through commutation? How have they have described it in the two forecasts?

Fellow posters on here will be able to help with exactly what to ask USS for to get exactly what you want. 

Probably worth asking USS what they think the reason for the difference is too.

Commutation factors here so you can see what a factor of about 17 could mean: 

RSTime

Am early 60s and asked for exactly the same in both statements, maximum lump sum. The confirmation statement I recently received does not seem to indicate what I requested, just states pension and lump sum. I assume commutation factors would not have changed between May and September?

As I mentioned earlier in this thread, there was an error in one of my statements earlier in the year and the one in May was meant to be the corrected statement with a retirement age of 30th September. I just don’t see how the forecast from May can be so different from the “confirmed” benefits statement I recently received?

ussdave

I'm not sure who could best help with this to be honest.  Could you try UCU to see if they have any recommendations (assuming you are a member)?  I would guess they must fairly regularly deal with members retiring.

RSTime

I have retired so not a member. I was hoping that someone could recommend an independent financial advisor who could understands the scheme and could verify the USS calculations.

I wonder how robust USS systems are in light of my experience. As mentioned earlier in the thread, if you do not request regular estimates you would never know if there was an issue/error. 

ussdave

RSTime said:

I have retired so not a member. I was hoping that someone could recommend an independent financial advisor who could understands the scheme and could verify the USS calculations.

I wonder how robust USS systems are in light of my experience. As mentioned earlier in the thread, if you do not request regular estimates you would never know if there was an issue/error. 

Yeah.  Hopefully someone else will be able to suggest something.

I share your concerns and I think I'll be getting regular (yearly at least) estimates as I get closer to retirement.

FIREmenow

You can stay in UCU as a retired member, it's about £3/mth.

Have USS given a reason why it is different to the last quote?

When commenting on the changes to factors, UCU stated that they are partnered with Quilter and members can have a free initial consultation, but Quilter are not independent financial advisors and the fees are high. 

Advice on here tends to be to look for IFAs in your area and chat to a few. USS has a guide for IFAs on the website so any IFA should be able to get to grips with how USS works, but I don't know if they would check calculations or what the cost might be to do it.

USS have interpreted your request for maximum lump sum differently in each calculation - either by mistake, to correct a(nother) mistake, or for another unknown reason. It seems that in the May one they sacrificed annual pension to maximise lump sum using the commutation factors as described above, which checks out with your age. Then for some reason they have not used commutation (or have reduced the size of the commutation) to lump sum in the more recent one. You deferred before the investment builder pension was introduced, so the only levers to pull to maximise lump sum are giving up annual pension (commutation) and taking money purchase AVCs. Were your AVCs money purchase, or to buy pension years?

For example, when adding the missing AVC back into the May quote they could have calculated  a tax-free amount in excess of the permitted limit. If they spotted that when doing the second quote, the difference would be another correction of another inaccurate calculation.

Do you want to give up pension to maximise lump sum, or do you want to take the maximum possible amount tax free from any AVCs whilst preserving your annual pension, or both give up pension and take max tax-free from AVCs?

RSTime

I contacted USS Friday and awaiting a reply.

AVCs were to buy pension years.

When it came to deciding options I selected maximum lump sum as with my TPS pension I am not far from the 40% tax threshold and I still do some PT work which takes me over (as will the state pension when that kicks in).

katejo

RSTime said:

So, I put in for retirement and received confirmation of my retirement benefits. To my surprise, the benefits were different to the estimate I received in May. The pension is £1,500 more per annum and lump sum £26,517 less.

I really have no confidence in how the USS calculate my pension and not sure what to do next? Has anyone else had a similar experience?

I remember reading your posting in May. Didn't it include a correction to the previous one (because an AVC hadn't been included)? At the time I discussed the 'error' with a colleague who is on USS and is having trouble getting accurate info from them. Do you have the name of the USS person who sent you the May figures? You could ask USS to go back to that person? How do the latest figures compare to the original 'inaccurate' quote earlier in the year? You mention the need to request frequent estimates. My colleague has found that USS is unwilling to do it more frequently (whereas I have found SAUL more helpful and I have a named benefits technician to go back to). 

RSTime

I usually ask for one statement a year and have done so for many years. When I replied to USS I did cc the person I communicated with in May, and yes, the error was that the AVC had not been included.

The LTA for the pension looks about right so I am hoping they have just made a mistake and not provided a statement based on the maximum tax free cash lump sum. Just so annoying.