If you currently pay into the Career Revalued Benefits section of USS then your employer pays in a sum equal to 16% of your salary, while you pay 6.5% of your salary. You get tax relief on your contributions, reducing the real cost. You also pay lower National Insurance because you are not paying into the Government’s State Second Pension Scheme. Also, you don’t pay tax on your employer’s financial contribution.
Take a look at the Cost of contributions modeller to see what the net cost of membership is for you.
Benefits vary depending on factors such as age, but include, subject to USS discretion:
1. Immediate protection for your family or dependants
Members currently paying into USS are covered for life insurance from day one of membership at no extra cost.
A tax-free lump sum of three times your annual salary if you die in service at any time, plus a pension for life for your husband/wife/civil partner/dependent partner.
This pension would be equivalent to half the pension you would have received at age 65 based on the pension you have already built up in the scheme, plus the projected future pension to age 65.
There would also be financial help for eligible children, normally up to age 18, or up to age 23 if in approved full-time education or training and approved by USS.
Refer to our Death in Service Factsheet for full information on death in service benefits.
2. Illness/injury incapacity cover
If you cannot carry on working because of long-term illness or injury, you get a pension for life and a tax-free lump sum, subject to USS eligibility criteria.
The size of these payments would depend on whether you have to stop work because of partial or total incapacity.
To qualify for this cover, you must have been a USS member for a minimum of two calendar years.
Special conditions apply if you had had a break in your service within the last two years and if it was known that you had a medical condition when you joined USS.
Refer to our Partial or Total Incapacity Retirement Factsheet for full details.
3. Retirement pension
A regular income for the rest of your life plus a tax-free lump sum.
Your pension will increase once in payment. The increases are linked to increases in official pensions paid to public sector employees like teachers, civil servants or NHS employees. USS will match increases in official pensions for the first 5%, if official pensions increase by more than 5% then USS will pay half of the difference up to a maximum increase of 10%. So, if official pensions increased by 15% USS increases would be 10%.
On your death, after retirement, there would continue to be a pension for your husband/wife/civil partner/dependent partner until they die. This would be equivalent to half the standard pension when you retired, plus pension increases to the date of your death.
There could also be support payments for eligible children.
How it works
We determine your salary for each period of 12 months that you have been a USS member. The actual amount of pension you get is calculated as an eightieth of your pensionable salary, for that year. For the lump sum it is 3/80ths.
"1/80 x pensionable salary = Pension for that year
Plus
3/80 x pensionable salary as the standard tax-free cash sum."
This pension is then increased leading up to your retirement. The increases are linked to increases in official pensions paid to public sector employees like teachers, civil servants or NHS employees. USS will match increases in official pensions for the first 5%, if official pensions increase by more than 5% then USS will pay half of the difference up to a maximum increase of 10%. So, if official pensions increased by 15% USS increases would be 10%.
This is the ‘standard’ package. You are free to vary the amount of tax-free cash and pension within certain limits.
The retirement income you get from USS is, of course, in addition to your state pension or any benefits you may also be entitled to from the state social security system. You normally have to pay income tax on pension income, unless the tax inspector tells us otherwise.
Early and Late retirement
There is flexibility, under certain circumstances, within the scheme rules for you to retire before normal pension age (currently age 65). But your pension will be lower.
If you retire before normal pension age (currently 65) then your benefits are reduced for early payment for each year and part-year you retire earlier than 65. The amount of this reduction is approximately 4% for each complete year early.
The minimum retirement age is 55.
However you can set out to plan in a tax-efficient way for early retirement by boosting the value of your pension by making what are known as "Additional Voluntary Contributions" (AVCs), either regularly or periodically.
Money invested in an AVC is currently eligible for tax relief at the highest rate of income tax that you pay.
You can also increase your normal regular pension income in exchange for deciding to take a lower tax-free lump sum on retirement, or none at all, or vice versa, depending on your financial circumstances when you stop work.
You may also be able to carry on working after you reach normal pension age and thus build up a bigger pension. You must however draw your pension by the time you reach age 75. If you do continue past normal pension age then the pension you had built up at normal pension age will be increased by what’s called a ‘late retirement factor’, over and above the usual rate of increase applied to the pension you have built up at that point.
However, in the case of both early and late retirement the exact details will depend on your individual circumstances at the time, your contract of employment and the policies of your employer.
Job mobility
USS caters for the employment patterns of people working in the academic world, including career breaks. Moving from one USS member institution to another is straightforward, as is transferring your pension arrangement to many public sector organisations.
Important:
Remember to nominate your beneficiaries. We need to know who would receive your USS benefits on your death. Keep this information up to date by completing Expression of wish (life assurance nomination) and if you are not married, or part of a civil partnership, then you can nominate a financial dependant to receive the equivalent of the spouse’s pension, use Registration of Potential Dependant form for this purpose.