USS pension scheme

[LordRothermereBlackshirtCunt]

I'm hopeless with this kind of thing and barely understand how the new scheme works. Is anyone here in the USS scheme? Will you be paying the additional voluntary 1% contribution? I gather I need to decide soon, and can't work out what to do.

[FoggyBottom]

I pay as much as I can, or the scheme limits will let me. I'm single with only myself to fall back on, no-one else to turn to, and so financial security is really important for my likely long old age (women in my family live into their 90s). However much they've jerked around with USS, it's still a better deal than other pension schemes.

[FoggyBottom]

But should add: I have 16 years of service in the old final salary scheme, so I've got a far better deal than someone joining it now. It's what we went on strike to try to stop ...

I lived in another country after my PhD, and for my first 2 jobs, and of course, with PhD study, didn't really start earning in a pensionable job till I was 25 and in another country with a less good superannuation scheme, so there's 15 years of not very much pension payment, and of course only NI related State pension contributions since I was 40, so I need to invest every scrap I can now.

[haybott]

Have you been to information sessions at your university?

My own opinion is that one should pay in as much as one can to the defined contributions section to USS because the standard contributions to USS are not going to be sufficient.

[FaFoutis]

Yes, I just signed up. Employer puts in 1% too. There's a calculator on the website that tells you what you are likely to end up with for the extra 1%. Mine was enough for a nice holiday when (if) I retire.

[LordRothermereBlackshirtCunt]

The information sessions at work were all helpfully scheduled at times when I was teaching, or away at a conference.

I need to get hold of my new membership number and play with the calculator, I guess. I've been in the final salary scheme for nine years, but am worried about the new scheme. On the other hand, I'm convinced that my job is going to kill me off before I get to retirement, so I'm hesitant to pay any more in! Not expecting the kind of longevity that FoggyBottom is!

Can you vary your contributions to the defined contributions section from time to time?

[FaFoutis]

I understood that you can vary contributions, or just pay in the odd lump. The only thing that concerned me is that there are no fees at present but there might be in the future. That is the element of gamble I think.
You can take the extra as a lump sum when you retire, which I don't think is possible with the rest of the USS pension. (I might be wrong, it is a mystery to me.)

I'm aiming to go part time as I get near retirement, there's no way I could cope with full time for the next 20 years.

[FoggyBottom]

I'm planning to retire at around 68 or so (not so long for me) as I need to really maximise my retirement income (I also feel I still have so much I want to do in my career - at least 2 more books to write!). I also pay those AVC things, and am looking at purchasing extra NI contributions, but I don't quite know how to go about that.

[murmuration]

Oh, this sort of stuff terrifies me. I signed up to an info session, so I hope that will shed light. I don't even understand what is happening with the final salary thing. I was attracted to the employer matches 1% thing - anything where I can get some extra 'for free' I'm thinking would be worth it?

[FoggyBottom]

Yes, if you can afford it now I think that 1% matched contribution is very good value.

[MedSchoolRat]

I went to talk about new-USS & completely understood then, but now it's all forgotten, oops.

Am I right to think that the defined contribution option only applies if your salary is over a certain threshold? There must be a reason why I decided that there was no reason for me to do anything.

[haybott]

Am I right to think that the defined contribution option only applies if your salary is over a certain threshold?

No. You join the defined contribution section automatically if your salary is over 55k and you/employer make contributions.

The "match" being discussed in this thread is open to everyone in the USS scheme. You pay at least 1% of your salary into the defined contribution and your employer matches it with 1%. Contributions above 1% won't be matched. If you earn less than 55k you have to join the defined contribution section to take up this "match". If you earn over 55k you will still have opt in to the "match" on top of your other contributions.

You should have a letter from USS giving you a new member number so you can register an account on the USS website, look for information and decide whether to take up this offer.

[murmuration]

OMG!! I logged into MyUSS and did the modelling thing and put in 1% with matching 1% and was thinking, okay, that's low, but assuming our mortgage is paid off maybe we could get by on that. Then I noticed the value was per year not per month.

After a little while thinking I'm completely screwed, I clicked on the assumptions thing and saw that it doesn't include the proportion from the final salary contribution (and models what appears to be a completely unrealistic 2.5% salary increase - above inflation - per year, although I know nothing so I could be wrong about that). Is there anything that will model what my actual benefits would be, total? As that wasn't very helpful.

[murmuration]

And why did they need to know my gender in order to estimate my benefits?

[haybott]

Models what appears to be a completely unrealistic 2.5% salary increase.

This is not unrealistic if one is early career and progressing up grades, so one has grade progression in addition to inflation.

I agree it is unrealistic for those who are more advanced in their career. It would be utterly unrealistic at my university for professors to expect a salary increase of 2.5% per year, for example, but the USS modelling assumes I will get this.

BTW USS in general are misbehaving about their assumptions. For the defined contributions they are assuming optimistic pay increases and stock market performance. When they were making the case for changing the terms of USS, their assumptions were much more negative and in favour of their case. There was an official letter by statistics/actuarial professors sent about this.

They need to know your gender, for older women, because of the changes to retirement age.

[FoggyBottom]

But murmuration the 1% is on top of the 8% you already contribute - and employers contribute 18% which is why FeC on research grants is around 46% on top of of gross salary. It's an extra which brings you a "free" 1% from your employer.

At least that's how I read all the bumf. Like others, my institution helpfully scheduled the one info session during a rather busy teaching time.

[LordRothermereBlackshirtCunt]

I've managed to log in now. You can change the unrealistic 2.5% salary increase assumption to something more accurate, like 1% (I am mid-career with no promotion prospects). It makes quite a difference, unfortunately.

[oxcat1]

Just as an aside, I am the daughter of an academic who died quite suddenly aged 49. USS provided me with a stipend for as long as I continued in full-time education, including my BA, MPhil and PhD! Because of illness all of these were quite protracted.

I have to confess that I was incredibly grateful for this unexpected maternal support for many, many years after her death!

[LordRothermereBlackshirtCunt]

Sorry, for murmutation, I meant to say: the website is very oddly laid out and it sounds like you are looking only at the investment builder part of it. You need to get into the benefit illustrator section to see what the main pension (including what you've accrued from the final salary scheme) will be: www.ussbenefitillustrator.co. uk

[LordRothermereBlackshirtCunt]

Apologies, I'm on my phone and the link hasn't posted correctly but hopeful you can make sense of it.

[MedSchoolRat]

Thanks Haybott, I found my USS number, now I need to unite it with NI no. I think I was put off by the rigid way the money gets invested, at least with my private pension I get some flexibility.

[FaFoutis]

You can choose where your additional contribution money gets invested.

Glad to hear that USS works that way oxcat.

[MedSchoolRat]

I must be thick, I never get these pension things.
I tried 1.5% pay increase (what we were offered this yr) and 2% inflation (over estimate at moment). 2% for investment return (should I go with their suggested 5% instead?).

The results are that for my £240/yr investment with USS, I'd get £347/yr.
Alternatively, I could stick £240/yr into an ISA, and (assuming same growth rates & also retiring in 20 yrs) I could draw that own for 13 yrs after retirement before it ran out.
The appeal of the ISA is that my kids would inherit full amount of what's left, and I could get to the full amount at any time if I wanted.

Using a real inflation rate, more like 0.5%, means a more generous £459/yr on the calculator.

Still, the way pensions are set up, they are disincentives to saving for retirement, sometimes.

[LordRothermereBlackshirtCunt]

I've been reading a bit more and see that there were concerns during the consultation period that no assurances were made that the dc section would be ring fenced to protect it from being used to bail out the db scheme in the future. Has anyone seen any update on this?

Also, for those who have been paying into the final salary pension, it seems that final salary is deemed to be your salary on the date the fs scheme closed (March 2016), not your salary at retirement.

[haybott]

But MedSchoolRat, you are not taking into account the 1% match from employer which you don't get with ISA.

I agree that it is far from clear that voluntary contributions above that 1% would be best put into USS, rather than elsewhere.

[MedSchoolRat]

The USS calculator claims to take into account the matching 1%. Weird if it doesn't.

I think I've decided on balance to do the extra dosh, but still I continue to be at how much charges eat up. If I could put £600 into an ISA, I'd get a better return.