Universities Superannuation Scheme (USS)
Important changes to the USS pension from 1 October 2016
What changes have been made?
31st March 2016 saw the closure of the Final Salary and Career Revalued Schemes within the USS pension scheme. All pension benefits to 31 March are protected under the USS regulation up to that date. From 1 April 2016, members of the USS pension scheme have been contributing to a defined benefit scheme called the USS Retirement Income Builder Scheme. You pay a monthly contribution equal to 8% of your salary and the School pays 18%. In the Retirement Income Builder, your benefits at retirement are based on a formula that takes account of your salary each year, and takes account of inflation.
With effect from 1 October 2016, a salary threshold is in place for the Retirement Income Builder. Pension contributions paid in respect of salary over the threshold (£55k this year) will be paid into a new defined contribution scheme called the USS Investment Builder. In the USS Investment Builder, your benefits at retirement are based on the contributions made by you and your employer to the USS Investment Builder and the performance of the funds that your contributions are invested in. Staff will be asked to make a decision on where contributions in respect of salary in excess of £55k should be invested. If you do not make any investment decision, your USS Investment Builder contributions (and those from the School) will be invested by USS in the default into lifestyle fund. In addition to this change, all staff contributing to USS (including those earning below £55k) have the option to invest an additional 1% or more of their pay into the USS Investment Builder. When you choose to contribute an additional 1% (or more) to the USS Investment Builder, you receive a matching contribution of 1% from the School.
What about the benefits I earned up to 31 March 2016?
Benefits based on your service and final salary at that date (sometimes referred to as accrued benefits) have been protected and remain unaffected by the changes.
Who is affected?
All staff who contribute to USS: you will have the option to invest in the USS Investment Builder. You can chose where those investments are made. Staff earning over £55k: your pension contribution in respect of salary in excess of the £55k threshold will automatically be invested in the USS Investment Builder. You can chose where those investments are made.
Please note, members close to annual or lifetime allowance thresholds may wish to take advantage of the voluntary salary cap (VSC). This allows members to cap the future accrual of benefits by setting a salary for pension purposes at a lower level than their actual salary.
What is the Voluntary Service Cap (VSC)?
The VSC allows you to cap the future accrual of pension benefits in the scheme by setting a salary for pension purposes at a level lower than your actual salary, provided it is no less than the salary threshold for that year (currently set as £55,000 from October 2016). More information is available here.
How do I register for the match or to choose my investments?
USS has launched a new online service for all members to support the USS Investment Builder.
The online service is MyUSS.
You should have received a letter sent to your work address with your new USS member number. This will allow you to log on to MyUSS.
What can I do on My USS?
On My USS you will be able to:
- manage additional contributions
- learn about investment fund options
- choose investments for your USS Investment Builder
- update your personal details including your target retirement age.
Can I choose to pay more into the USS?
Yes. You can pay more to increase the value of your retirement benefits under the USS Investment Builder. Further information can be found here: https://www.uss.co.uk/members/members-home/the-uss-scheme/uss-investment-builder
What about State Pension benefits?
Until 5 April 2016 USS (and SAUL) was contracted-out of the State earnings related pension scheme. With the introduction of the new state pension on 6 April 2016, both USS and SAUL ceased to be contracted-out. This means that from 1 April 2016 you will pay the full rate of National Insurance Contributions. Further information can be found on the gov.uk website for details of the new State pension arrangements.
The USS gave presentations at SOAS in July 2016. If you missed the presentation or would like to review the information you can now view the presentation on USS slides or view the presentation as a USS video.