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.

My fiance is a financial advisor - he recommends any pension deals where the employer matches contributions. I signed up today.

Thanks, lord, yes, I was looking at just the Investment Builder thing. But it looks like you do need to look at both, because while the Benefits Illustrator gives you the pension yearly bit, it only shows the Investment Builder as a lump sum amount. Unless that is all it is, and the yearly amount is only an example? I find this all so confusing. Hopefully the session will make it clearer. At least I can attend mine, although I notice that they have scheduled it early in the first week of classes, a time that very few people will be able to come! Are they purposefully trying to make it hard to find out about?

And complete ignoramus question: when I see the yearly pension amount, is it just taxed like normal income, can I just divide that by 12 to figure out how much money I get, or somewhere in between? I'm realising looking at it that I've just assumed it's like normal income, but I have no idea.

When you reach state pension age you no longer pay national insurance but you do pay income tax above your personal allowance. The amounts shown are gross, not net, so your net amount will be considerably less and dependent on the personal allowance and tax rates at the time.

I think putting in the matched 1% makes sense, but I can't understand if there is any advantage to going above that. Can anyone see why it would be a good idea?

I'm scared of getting wrong and wasting money but also scared of how little I will get in retirement because by the time I could pay into a scheme I was in my 30s.

There is certainly advantage in saving more for retirement, given that USS is now providing a much poorer pension scheme than it used to.

It is debatable whether contributions above 1% would be better off in USS, or in another pension scheme, or in ISA type savings. Before deciding about this, one needs to know more about what guarantees USS will give that the defined contribution fund won't be raided later to support the general fund. (The issue raised above.)

I will probably end up making additional contributions to another pension fund, but I have the option of one (abroad) that outperforms USS and for which my contributions are ring-fenced.

The advantage is a tax break on your contributions, I think? Particularly if your university operates a salary sacrifice scheme. Although I'm a bit about salary sacrifice schemes as they cut tax & NI payable, so there's less to go round for everyone.

Yes, the tax break looked good but I wonder if putting the extra in an ISA would be safer?

Dunno what you mean by safer.
The USS will probably only tank like the BHS scheme if the entire economy collapses, and then maybe we will have bigger things to worry about than pensions. ISAs wouldn't be any safer in that scale economic meltdown.

What about that announcement about no tax on bank account interest up to £1000 per year? Some people are saying that there's no point in pensions, since that was introduced (was it introduced?).
The nice thing about ISA & other savings vehicles (not pensions) is that you have more control of your money, fewer rules about how much you can get out and when. The standard pension model fits well if you retire at 65 & spend a consistent amount every year until you die. Other models for retirement funds might fit better if you (eg) don't retire until 75 & spend a lot each year age 75-80 but then very little for next 10 yrs until death. Or retire at 55 due to ill health, etc.

Retiring as late as possible is one of the easiest ways to have secure income in older years, may I say, to point out the obvious. My dad draws a pension but also still works PT at 73 and has no plans to quit, I know I'll do something similar.

Re safer, I was thinking about how pensions were hit by the 2007 crisis.

Working later seems logical but not an option for many academics and re-training in your 60s could be tricky.

It all worries me when I stop to think about it.

Working later seems logical but not an option for many academics.

Why is not an option? The standard retirement age for academics is 67 at the moment, but you cannot be forced to retire at 67 and many academics go on longer (unless they are managed out by teaching load, REF pressures etc).

Cambridge is one university I know which has an internal agreement that academics must retire at 67 but this would almost certainly not stand up to legal challenges. In any case they have one very famous disabled academic who retired from his professorship at 67 but is still working as director of research at 74 i.e. they find a fudge if top academics want to keep on working.