USS - Newbie needing help!

Docbarty66

Hi Everyone, there seems to be some great advice on here...and great explanations on the pension minefield. I really can't get my head around it!

Anyway, I am taking VS at the end of April. My severance pay is 15 months' salary, and the taxable element is £81,359.47. I am planning to pay this into the Investment builder part of my USS pension. I know there is a maximum of £60k tax free contribution but hoping through 3 year but hoping I can use previous 3 years' allowance.

I have received a retirement quote from USS which is as follows:

Total Standard Pension - £26,371.32
Investment Builder - £120,015.21 (this includes the £81k above)
MPAVCs - £197,902.17

My option table is as follows:


 I won't take the maximum annual pension, for tax reasons, but deciding between the standard and taking the maximum tax free lump sum is confusing me. I have also been into the modeller and if I take a lower annual pension, I get these options for example:

Annual Pension £29,703
Tax free lump sum £198,019
DC Savings left £120,015

So...if I can live on £29,703 (I'm mortgage free so should be OK) would leaving savings in the Investment Builder be the better option? And when can I take these?

Sorry if this is waffly...for info I'm 58, if that matters. Thank you all so much
Sue

Cobbler_tone

The difference between the standard (middle column) and max (right column) is because it is exchanging all of your investment builder for extra tax free cash and pension. The rate doesn't look brilliant.
I don't know much about the investment builder in terms of flexibility and ease of access but you could move this to another pension platform. 
I read with interest as trying to educate myself on the USS pension as will impact my partner in the next year.

dunroving

Cobbler_tone said:

The difference between the standard (middle column) and max (right column) is because it is exchanging all of your investment builder for extra tax free cash and pension. The rate doesn't look brilliant.
I don't know much about the investment builder in terms of flexibility and ease of access but you could move this to another pension platform. 
I read with interest as trying to educate myself on the USS pension as will impact my partner in the next year.

I retired from USS in 2017 and you are correct, it is possible to move investments from the Investment Builder to another provider (Fidelity in my case). It's long enough that I can't remember the details, but it wasn't particularly complicated if I recall correctly. 

Docbarty66

Thanks @Cobbler_tone...I agree the rate isn't great. I just don't know who to go for advice. My ex-husband spoke to an IFA but he seemed keener to invest his money rather than 'advise' as such...

Docbarty66

dunroving said:

Cobbler_tone said:

The difference between the standard (middle column) and max (right column) is because it is exchanging all of your investment builder for extra tax free cash and pension. The rate doesn't look brilliant.
I don't know much about the investment builder in terms of flexibility and ease of access but you could move this to another pension platform. 
I read with interest as trying to educate myself on the USS pension as will impact my partner in the next year.

I retired from USS in 2017 and you are correct, it is possible to move investments from the Investment Builder to another provider (Fidelity in my case). It's long enough that I can't remember the details, but it wasn't particularly complicated if I recall correctly. 

But what are the benefits of doing this? 

dunroving

Docbarty66 said:

dunroving said:

Cobbler_tone said:

The difference between the standard (middle column) and max (right column) is because it is exchanging all of your investment builder for extra tax free cash and pension. The rate doesn't look brilliant.
I don't know much about the investment builder in terms of flexibility and ease of access but you could move this to another pension platform. 
I read with interest as trying to educate myself on the USS pension as will impact my partner in the next year.

I retired from USS in 2017 and you are correct, it is possible to move investments from the Investment Builder to another provider (Fidelity in my case). It's long enough that I can't remember the details, but it wasn't particularly complicated if I recall correctly. 

But what are the benefits of doing this? 

Some providers are better than others in terms of customer service, charges, selection of investments, etc..

I already had a SIPP with Fidelity, and thought their choice of investments were larger and better.

I vaguely recall that the USS Investment Builder was with ... Prudential? And there was a pretty limited number of funds to choose from.

dunroving

Docbarty66 said:

Thanks @Cobbler_tone...I agree the rate isn't great. I just don't know who to go for advice. My ex-husband spoke to an IFA but he seemed keener to invest his money rather than 'advise' as such...

Argh, that rings so many bells. It can be difficult to find an IFA who truly has your best interests at heart rather than their own (in my experience ...)

Too many that I talked with wanted to manage my investments for an annual fee - but all I wanted was advice (the clue is in the name ... advisor ...)

gwt1965

Docbarty66 said:

But what are the benefits of doing this? 

More flexibility in how you access the IB money. USS only offers UFPLS, where each payment is 25% tax free with the other 75% taxed. 

Also more flexibility with how you can invest the money, i.e. full choice of funds/ETFs etc offered by the platform you transfer to. 

The benefit of leaving the IB money with USS is that you pay no fees. 

FWIW I retired at the end of January, took the middle option, and left the IB where it is for the time being. May transfer in the future but I don’t need access to it yet.

Asimovs_nightfall

A related point is that you cannot pay into your pension more than you earn, so I'm not sure how your timing works on this, at the end of April.  

Have you thought this through because I'd be interested to see how an additional £81,359.47 is invested if you aren't going to work and are not, I assume, in a university or the USS. How is this done?

Cobbler_tone

Asimovs_nightfall said:

A related point is that you cannot pay into your pension more than you earn, so I'm not sure how your timing works on this, at the end of April.  

Have you thought this through because I'd be interested to see how an additional £81,359.47 is invested if you aren't going to work and are not, I assume, in a university or the USS. How is this done?

The VS will be classed as earnings and access to the allowance from previous years. We don't know the exact numbers but assume the OP knows this. Judging by the VS being based on 15 months salary, it won't be much of a stretch to lose it in the investment builder.

Docbarty66

Cobbler_tone said:

The VS will be classed as earnings and access to the allowance from previous years. We don't know the exact numbers but assume the OP knows this. Judging by the VS being based on 15 months salary, it won't be much of a stretch to lose it in the investment builder.

"Lose it in the investment builder"?????