USS: timing and effect of lump sum payment in just before retirement

bluebirdy

Posted this elsewhere but rightly was reminded to ask a distinct question.

I’m still working out whether to apply for VS. Am in USS and wondering about taking VS then soon after that, taking my pension.

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)?

MPLMPL

Not exactly sure what you are asking or were expecting the additional £20k to do?
If you are already at max TFLS then adding £20k will simply add £20k to the IB leaving this as an additional uncrystallised £20k. Worth doing, as you will be able to take 25% of it tax free in the future, rather than paying tax on the entire amount.
Did you think it would increase your DB pension amount? You can't commute IB to buy additional DB pension, you can only commute your 3 x DB pension commencement lump sum to increase your pension (rule change from a couple of years ago?).

swindiff

Be aware that if you are retiring early and you have a gap between your retirement date and when you actually draw your pension you may end up with your pension being further reduced.  
In my case, I can retire from the age of 60 without any actuarial reduction for my pre 2011 service, with agreement from my employer (I have never heard of this being refused)  However, If I was to terminate my service at 60 for example and take my pension at 61, all of my pension would be actuarially reduced.  Once I leave service, the age at which I can take my pre 2011 pension without actuarial reduction increases from 60 to 63 1/2

bluebirdy

Thanks, I think I’ve worked out how to make it work with adding a VS lump sum and USS are going to send me yet another quote.

@swindiff I will probably need to take pension more or less immediately, it would just be a small gap depending on what employer wants as exit date if VS is taken.

Now I’m trying to get my head around the difference between flexi access drawdown (but transferring to another provider because USS don’t do it?) and UFPLS etc. if I am able to transfer in some money. FAD seems to be slightly better value but I’m guessing then I’d also have to pay fees to someone else. It is all so very complicated!