Transferring out the DC part of a hybrid pension (USS) - Things to consider?

FIREmenow

Hi Everyone, 
I'm planning to transfer out the DC part of my USS pension into a personal pension this tax year. I'd be grateful for any thoughts on what to consider, check, ask about, and if anyone has done this with USS or a similar hybrid scheme. I suspect asking about timescales will be a piece of string answer!

Can only be done once per year without cost and must be the entire pot. I think it will have to be a cash transfer as some underlying funds are not on the open market.

I have a few aims:
To empty and 'reset' the pot whilst small (~£12k), with plenty of time to rebuild to a level where I can take it all tax free with the DB part.
To have some separate DC funds for bridging 57-NPA with less need for actuarial reduction. Potentially make use of small pots rule.
To have more transparency and control over underlying investments and use passive index trackers, although I will pay platform and fund fees.

I'm salary sacrificing extra into the DC part, so it's preferable to paying into a personal pension directly for NI and student loan saving.

I'm 39, basic rate taxpayer, 14 more years needed for state pension, two DB pensions so far total £7k/yr, intending to retire as early as possible and also have S&S ISA and LISA for bridging.

MPLMPL

It is transferred in cash. My timescale. I started the process by requesting the transfer mid-August 2022. After form signing etc. it was 29/11/22 before  ~£130,000 disinvested for transfer by USS. Transfer didn't take place until 8/12/22.
Edit - transfer was to Fidelity.

FIREmenow

Thanks @MPLMPL that's really helpful. 

Had you already de-risked your portfolio before the request or kept it in the same choices? I'm thinking if there is a crash or correction before the disinvestment which then crystallises a large loss.

When was the cut-off date when your new contributions stopped being added to the transfer?

Many thanks for your insight.

MPLMPL

I chose not to de-risk as it was all in the Global Equity fund and was going to invest in an equivalent in SIPP (HMWO). Figured if there was a crash then it would buy the equivalent at crash prices. Can't remember if there was a contribution cut-off.
I've since built IB back up and about to take almost the entirety tax free as part of TFLS in September when I start drawing my DB pension. I've been informed by USS that my last 2 months contributions won't be invested, but I think this is specific to retirement, not transferring the IB out.

FIREmenow

Thanks for the extra information, I'm glad you've got the best of both worlds with max tax-free cash and a DC pot on the side!

(And retiring before the ERFs change)

bluebirdy

Hi,

Can I jump in here to ask a USS question? Sorry - I know I should start another thread but as you’re all here.

I’m still working out whether to apply for VS. I’ve been trying to use the modeller to plan what happens if I put some of the taxable part of any VS payment into the IB but then take retirement straight afterwards (ie within a month or two, to benefit from the ERF thing)

Was planning to take max TFLS but leave some IB invested as it made very little difference to pension/LS to do this.

Equally though, chucking in an extra £20k amount into the IB *also* seemed to make very little difference to anything.

Can anyone explain this to me logically (is it to do with the max TFLS being based on a fictional pot for a DB pension?) and what you would do if you were me in these circs?

Or maybe I’ve just made a mistake in the modeller (again, although it isn’t the most user friendly/stable of processes right now) and need another go, or to ring them (again)?

NoMore

bluebirdy said:

Hi,

Can I jump in here to ask a USS question? Sorry - I know I should start another thread but as you’re all here.

Then why don't you, the forum isn't just here to answer your questions, its here to help everybody, so somebody who has a similar question in the future to yours, is going to struggle to find answers because you decided to ask on a tangential thread rather than start your own thread with a title that its specifically about.

No doubt you will get answers on this thread but its a pet peeve of mine when people do this, when they should really start their own thread.

bluebirdy

NoMore said:

bluebirdy said:

Hi,

Can I jump in here to ask a USS question? Sorry - I know I should start another thread but as you’re all here.

Then why don't you, the forum isn't just here to answer your questions, its here to help everybody, so somebody who has a similar question in the future to yours, is going to struggle to find answers because you decided to ask on a tangential thread rather than start your own thread with a title that its specifically about.

No doubt you will get answers on this thread but it’s a pet peeve of mine when people do this, when they should really start their own thread.

Fair enough. In fact I posted here by mistake - it was supposed to be on the USS Options thread, no idea how I posted it on this one. But you’re right in general. However USS threads are always fairly “niche”!