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    • wallofbeans
    • By wallofbeans 15th Sep 18, 3:35 PM
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    wallofbeans
    USS Pension
    • #1
    • 15th Sep 18, 3:35 PM
    USS Pension 15th Sep 18 at 3:35 PM
    Hello all,

    I've worked freelance most of my life but as of 3 years ago I started doing a part-time proper job in teaching that offered a pension. I've been paying a chunk of my salary into it since, but still don't really understand how it works.

    Asking the USS people exactly how much I have in a pot gets me nowhere, and I find it disconcerting not to know how much money I have or be able to check up on how it's doing etc, even if I can't access it.

    I was told this was a great pension scheme when I started the job but I'm also aware there has been a lot of noise recently about it not being as great as used to be thought.

    Is it still worth me giving them a chunk of my part-time salary?Maybe I would be better off saving my money another way?

    How can I figure out how much I have in there? They've given me some numbers but it's not very much and isn't the exact amount I'm after. Although, perhaps that's not a thing they'll ever give out.

    Any advice?
Page 1
    • JoeCrystal
    • By JoeCrystal 15th Sep 18, 3:48 PM
    • 1,476 Posts
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    JoeCrystal
    • #2
    • 15th Sep 18, 3:48 PM
    • #2
    • 15th Sep 18, 3:48 PM
    Did you get any annual statement at all from USS Pension?

    Sorry but as far as I can see, USS Pension seems pretty straightforward. Well, it is still one of the best in the country by its status of DB. As a member you will accrue a pension of 1/75 of your salary and a cash lump sum of 3/75 of your salary for each year of service. At the end of each year, your benefits for that year are calculated and added to previous years. This is then revalued every year in line with standard pension increases.

    No, do NOT opt out of USS Pension, that would be VERY expensive mistake for you. I would have to pay 25% to 30% of my salary to get something similar with private pension (and if the stock market favours me all the way) .

    How much did you get paid over the last three tax years? Even it is not very much, it can be a solid foundation for you to build upon.
    • Dazed and confused
    • By Dazed and confused 15th Sep 18, 3:54 PM
    • 3,199 Posts
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    Dazed and confused
    • #3
    • 15th Sep 18, 3:54 PM
    • #3
    • 15th Sep 18, 3:54 PM
    You almost certainly haven't got a pot of money.

    You are building up a guaranteed pension, the amount of which will be based on your earnings.

    In all honesty you will probably struggle to find many better pensions (maybe become an MP?).

    It would be madness to opt out however it will cost the country a lot of money to provide you with this pension when you retire so you would be doing the rest of us a favour by opting out
    Last edited by Dazed and confused; 15-09-2018 at 3:56 PM.
    • xylophone
    • By xylophone 15th Sep 18, 3:55 PM
    • 27,267 Posts
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    xylophone
    • #4
    • 15th Sep 18, 3:55 PM
    • #4
    • 15th Sep 18, 3:55 PM
    Surely you have been provided with a Scheme Booklet?

    If not, you can download from their web site.
    • wallofbeans
    • By wallofbeans 15th Sep 18, 3:55 PM
    • 972 Posts
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    wallofbeans
    • #5
    • 15th Sep 18, 3:55 PM
    • #5
    • 15th Sep 18, 3:55 PM
    Ah yes, but you are thinking a straightforward pension scheme would be something I understand. I don't. I've never had a pension before. I'm learning as I go.

    I had an annual statement last year, and I've spoken with them in the last few weeks, asking for a current update, which I got in the post yesterday. I'm still baffled by the whole thing though.

    The pension takes around 100 per month from my part-time salary, and I've been working there exactly three years now. They say I have approx 900 gross per annum, plus a tax free lump sum of around 3k.

    It doesn't seem like very much. And what happens if I don't live long past retirement - where does the rest of the money go?
    • wallofbeans
    • By wallofbeans 15th Sep 18, 3:56 PM
    • 972 Posts
    • 39 Thanks
    wallofbeans
    • #6
    • 15th Sep 18, 3:56 PM
    • #6
    • 15th Sep 18, 3:56 PM
    You almost certainly haven't got a pot of money.

    You are building up a guaranteed pension, the amount of which will be based on your earnings.

    In all honesty you will probably struggle to find many better pensions (maybe become an MP?).
    Originally posted by Dazed and confused
    But what does that mean? Can someone explain as if I am an idiot.
    • wallofbeans
    • By wallofbeans 15th Sep 18, 3:58 PM
    • 972 Posts
    • 39 Thanks
    wallofbeans
    • #7
    • 15th Sep 18, 3:58 PM
    • #7
    • 15th Sep 18, 3:58 PM
    Surely you have been provided with a Scheme Booklet?

    If not, you can download from their web site.
    Originally posted by xylophone
    Yes, I have but it doesn't help me that much...
    • Dazed and confused
    • By Dazed and confused 15th Sep 18, 4:01 PM
    • 3,199 Posts
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    Dazed and confused
    • #8
    • 15th Sep 18, 4:01 PM
    • #8
    • 15th Sep 18, 4:01 PM
    So you have paid in for 3 years and already accrued 900/year in benefit (in today's terms). Payable for maybe 30+ years. And a lump sum of 2,700.

    You do realise that paying that 100/month is probably also saving you 20/month in tax so the real cost is only 80.
    • JoeCrystal
    • By JoeCrystal 15th Sep 18, 4:03 PM
    • 1,476 Posts
    • 924 Thanks
    JoeCrystal
    • #9
    • 15th Sep 18, 4:03 PM
    • #9
    • 15th Sep 18, 4:03 PM
    But what does that mean? Can someone explain as if I am an idiot.
    Originally posted by wallofbeans
    As a member you will accrue a pension of 1/75 of your salary and a cash lump sum of 3/75 of your salary for each year of service. At the end of each year, your benefits for that year are calculated and added to previous years. As far as I can see, you are on 15,000 salary. Assuming you are on that salary for last three years, you would have built up the following:

    2016: 15,000 so divide that amount by 75 so it become 200 a year pension and times it by three to get a lump cash sum of 600
    2017: 15,000 so divide that amount by 75 so it become 200 a year pension and times it by three to get a lump cash sum of 600
    2018: 15,000 so divide that amount by 75 so it become 200 a year pension and times it by three to get a lump cash sum of 600

    The pension from 2016 and 2017 get revalued so it matches the current year in real term value.
    Last edited by JoeCrystal; 15-09-2018 at 4:16 PM.
    • wallofbeans
    • By wallofbeans 15th Sep 18, 4:03 PM
    • 972 Posts
    • 39 Thanks
    wallofbeans
    So you have paid in for 3 years and already accrued 900/year in benefit (in today's terms). Payable for maybe 30+ years. And a lump sum of 2,700.

    You do realise that paying that 100/month is probably also saving you 20/month in tax so the real cost is only 80.
    Originally posted by Dazed and confused
    Right, so if I live a long time after retirement then it's great. But what if I don't? I'm just trying to get my head around the idea of pensions I think. This is all new to me.
    • wallofbeans
    • By wallofbeans 15th Sep 18, 4:07 PM
    • 972 Posts
    • 39 Thanks
    wallofbeans
    As a member you will accrue a pension of 1/75 of your salary and a cash lump sum of 3/75 of your salary for each year of service. At the end of each year, your benefits for that year are calculated and added to previous years. As far as I can see, you are on 15,000 salary. Assuming you are on that salary for last three years, you would have built up the following:

    2016: 15,000 so divide that amount by 75 so it become 200 a year pension and times it by three to get a lump cash sum of 600
    2017: 15,000 so divide that amount by 75 so it become 200 a year pension and times it by three to get a lump cash sum of 600
    2018: 15,000 so divide that amount by 75 so it become 200 a year pension and times it by three to get a lump cash sum of 600

    The pension from 2016 and 2017 get revalued so it matches the current year in real term value.
    Originally posted by JoeCrystal
    My salary was about that this past year, but my hours fluctuate so I was on more the two years before, and this coming year will be on something inbetween.
    • Kynthia
    • By Kynthia 15th Sep 18, 4:09 PM
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    Kynthia
    So you've paid in 3,600, which possibly only cost you 2,880 as you probably would have been taxed on that money if you hadn't put it into a pension. You're going to get out 3k plus 900 every year of your retirement and you don't think that sounds like much? Save that into a private pension and see what you get.

    You are also probably covered for a death in service lump sum to a nominated person should you die whilst an employee, a spousal pension of perhaps a third of your annual pension which will be paid from when you pass, even if that's before retirement age, for the rest of their life, a dependants pension for children until they are adults if you pass while they are children, and the possibility of an ill-health retirement if you get too ill to continue working. Read your scheme literature again to get the exact details as I don't know the USS specifically.

    Maybe your children are grown, you don't have a partner, and you die very soon after retirement. Yes then you'll have made very little on your contributions. These cases are funding those that live to their 90s or die with infant age children who receive a percentage of the pension for 15 years and a spouse who receives some for 50 years. The main thing is you and your partner will have an income on retirement for as long as you need it.
    Last edited by Kynthia; 15-09-2018 at 4:17 PM.
    Don't listen to me, I'm no expert!
    • Dazed and confused
    • By Dazed and confused 15th Sep 18, 4:09 PM
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    Dazed and confused
    That'll be the least of your worries!

    Does this help
    https://www.uss.co.uk/members/members-home/life-events

    I genuinely think you are looking at this from the wrong angle. Most people would kill to have a pension as good as USS and will think you are completely mad to even think of leaving it.
    • wallofbeans
    • By wallofbeans 15th Sep 18, 4:21 PM
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    wallofbeans
    That'll be the least of your worries!

    Does this help
    https://www.uss.co.uk/members/members-home/life-events

    I genuinely think you are looking at this from the wrong angle. Most people would kill to have a pension as good as USS and will think you are completely mad to even think of leaving it.
    Originally posted by Dazed and confused
    I think I am looking at it from the wrong angle and do need to change my perspective on pensions.

    My brain is firstly asking why I need to save all that money for when I am just sitting in a chair and watching Countdown, and aren't I better off having it and spending it now.

    I remember a friend's dad in his 70s once telling how he thought it was all the wrong way round, and that he had so much money now when he didn't need it, but had nothing when he was young and could have done with it. And I think of that, when I look at pensions.

    But I can see that that's probably a naive and immature angle on it. This thread is already helping to make me look at this a different way, so thank you!
    • JoeCrystal
    • By JoeCrystal 15th Sep 18, 4:23 PM
    • 1,476 Posts
    • 924 Thanks
    JoeCrystal
    My salary was about that this past year, but my hours fluctuate so I was on more the two years before, and this coming year will be on something inbetween.
    Originally posted by wallofbeans
    Okay, but out of the value of your money, you would be extraordinary hard pressed to come up with a better way to save up for your retirement. Out of interest, I thought I had a look to see how much it would cost me if I as 32 years old joined USS on 15,000 salary and stuck with it for 33 years, I would expect a guaranteed index-linked pension of 6,600 with all bells and whistles. If I want something similar by contributing privately, I would expect to contribute 47% of my salary or 587.50 per month and that if the market was averaging out very well. Of course, I would get less if the market crashes but that is the nature of the market)
    • wallofbeans
    • By wallofbeans 15th Sep 18, 4:26 PM
    • 972 Posts
    • 39 Thanks
    wallofbeans
    Okay, but out of the value of your money, you would be extraordinary hard pressed to come up with a better way to save up for your retirement. Out of interest, I thought I had a look to see how much it would cost me if I as 32 years old joined USS on 15,000 salary and stuck with it for 33 years, I would expect a guaranteed index-linked pension of 6,600 with all bells and whistles. If I want something similar by contributing privately, I would expect to contribute 47% of my salary or 587.50 per month and that if the market was averaging out very well. Of course, I would get less if the market crashes but that is the nature of the market)
    Originally posted by JoeCrystal
    And that's the sort of information that is really helpful. Estimations of what I will get out of this long term. So I can feel good about giving over a chunk of money every month.

    What is a "guaranteed index-linked pension"?
    • squirrelpie
    • By squirrelpie 15th Sep 18, 4:28 PM
    • 84 Posts
    • 37 Thanks
    squirrelpie
    Right, so if I live a long time after retirement then it's great. But what if I don't? I'm just trying to get my head around the idea of pensions I think. This is all new to me.
    A defined benefit pension is a bit like an insurance policy. The contributions you make are like the premiums and the pension itself is like the payout from the policy.


    As things stand, your expected lifetime after retirement (i.e. after the pension starts paying out) is something like twenty years. So if you stopped work now, you would expect to get back something like 20 x 900 = 18,000, which is why people say it's good value for your contributions of 3 x 12 x 100 = 3,600.


    Yes, it won't be as good value if you don't live as long as average, although many pensions have special terms if you are likely to die very early. But the real benefit of a defined benefit pension comes if you live longer than average. It never runs out, it just keeps paying you month after month. And you never have to worry about whether your savings will last long enough, so it gives you some certainty along with your state pension.
    • wallofbeans
    • By wallofbeans 15th Sep 18, 4:30 PM
    • 972 Posts
    • 39 Thanks
    wallofbeans
    A defined benefit pension is a bit like an insurance policy. The contributions you make are like the premiums and the pension itself is like the payout from the policy.


    As things stand, your expected lifetime after retirement (i.e. after the pension starts paying out) is something like twenty years. So if you stopped work now, you would expect to get back something like 20 x 900 = 18,000, which is why people say it's good value for your contributions of 3 x 12 x 100 = 3,600.


    Yes, it won't be as good value if you don't live as long as average, although many pensions have special terms if you are likely to die very early. But the real benefit of a defined benefit pension comes if you live longer than average. It never runs out, it just keeps paying you month after month. And you never have to worry about whether your savings will last long enough, so it gives you some certainty along with your state pension.
    Originally posted by squirrelpie
    Always good to have a reason to live longer!
    • JoeCrystal
    • By JoeCrystal 15th Sep 18, 4:30 PM
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    • 924 Thanks
    JoeCrystal
    And that's the sort of information that is really helpful. Estimations of what I will get out of this long term. So I can feel good about giving over a chunk of money every month.

    What is a "guaranteed index-linked pension"?
    Originally posted by wallofbeans
    Guaranteed part is a promise with certainty from USS scheme to pay you that pension when you get to 65 or whatever the scheme say is the default age. None of the personal or private pensions got that a kind of Guaranteed Income although the old ones might have a Guaranteed Annuity Rate but even so, that amount will be based on the fund value anyway.

    The index-linked is a pension that will increase accordingly to inflation every year. The increases are linked to increases in official pensions paid to public sector employees like teachers, civil servants or NHS employees.
    Last edited by JoeCrystal; 15-09-2018 at 4:33 PM.
    • wallofbeans
    • By wallofbeans 15th Sep 18, 4:31 PM
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    wallofbeans
    And if I don't retire at 65, can I start getting it even if I am still working?
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