Pension help - LGPS vs USS

[TazTheFairy]

Uni specific one I think but welcome any expert views or signposting as I have tomorrow left to decide and going round in circles, the LGPS looks better as contributions are higher, apart from a 3 x lump sum on retirement that USS offers. This is not my strong point at all clearly 🙈 thank you for any help at all.

How old are you what grade are you? Do you actually get a choice. Generally it’s grade dependent.

presumably you’re at a post 92 university since there are only a couple of pre 92s still in the lgps

They're defined benefit, so the contribution rate doesn't matter, it's the accrual rate you want to consider.

So I would look at:

• Accrual rate
• retirement date
• final salary or career average, and if career average what's the revaluation rate
• lump sum
• spouse's and death benefits

I suspect LGPS is better but I don't know a lot about it. USS is only career average up to a certain salary so if you're over that salary that's a drawback.

40s and moving from 6 to 7 which is the boundary for change, but I can decline the move and stay on LGPS.

And no, not a post 92 uni.

Employee contribution rate matters, as it's not necessarily the same for both pensions. USS has been in dire straits for a few years and increased employees' contribution to 9.6(?)%, although they reduced it to 6.6(?)% a year or two ago.

Does LGPS accrue at one 49th of annual salary, and USS at one 75th? You can work out how much you would accrue for each year worked. The USS 3x lump sum is like getting an additional three years' worth up front, but the ongoing annual amount will be lower than LGPS.

Also check if LGPS is backed by the government (ie will bail them out if they fail). USS isn't and a few years ago were measuring their deficit in £billions.

Check if the retirement due to ill health benefits are the same, and also death in service, if you have dependants.

I have LGPS from a previous job and a few years ago had the option of USS or SAUL (Uni of London). I jumped at the chance for SAUL as I wouldn't have wanted to touch USS with a bargepole - at that time USS would have meant paying about £90 more a month than SAUL, for the same benefit. Although the employee contributions are now the same (or almost).

Do you have any other pension provision?

Are you already in LGPS? If I'd had the choice of LGPS or USS, I'd have happily chosen LGPS.

Look in the Academic Common Room topic for the old threads about USS.

For what it’s worth, I was in the same situation as you and stayed in LGPS. I had several years in LGPS from a previous employer and it made sense at the time to remain. Sorry, I can’t remember the specifics but it was the right decision for me at the time.

Apologies for not replying earlier, had a volunteering drama to sort out 🙄
Looking at all your answers stating in LGPS looks favourable, accrual is 1/49th vs 1/85th, employee cost is very minimal difference at the moment but I'm aware that's not been the case over the last few years, employer rate is 18% vs 14.5%. What have I missed? I've read, but can't find where right now, LGPS is government backed and USS isn't which is scary. Thank you for those with better financial brains than me for your help.

Ok well there are only a very small number of pre 92s in the LGPS and I’m aware of at least two of those planning on coming out since it’s prohibitively expensive.

However the lgps is the gold plated pension so better to be in even if it’s just for a couple of years (particularly as you approach 55)

The employer contribution rate is irrelevant

USS accrual rate is 1/75 so make sure you're looking at the current benefits

Regardless, 1/49th is much better accrual than 1/75 but you will also get a lump sum of 3/75 at retirement from USD

Both are (I think) Career Average Revalued Earnings schemes so no difference there

Compare the members contribution rate since that's what you'll be paying. If both are similar you'll be getting more for your money in LGPS

Also consider the protection benefits- death in service lump sum and pension for your spouse / children