Members of USS have the option to transfer benefits they may have built up in other pension schemes into USS. This includes pension schemes in the UK (that are registered for tax purposes) and many overseas schemes as well.
However you can’t do this if:
- you have retired
- have left the scheme
- are currently on a period of absence.
What’s the benefit of a transfer?
Firstly it’s important to point out that for many members this might not be the best option, but for some it could be very advantageous. And please don’t transfer benefits just because it’s handy to have everything in one place. That’s not a good reason on its own for making a transfer.
If you do transfer benefits into the scheme the transfer will secure you additional benefits. The form of these benefits differs depending on whether the transfer came from a public sector scheme or from another arrangement in the private sector.
You will need to compare the benefits being offered in USS, accounting for any potential early retirement reductions if you plan to retire before the scheme’s Normal Pension Age. You should obtain a complete statement from the last scheme detailing the current value of your benefits with them in order to do a complete comparison.
Public sector scheme transfers
If your previous pension scheme was in the public sector (eg. teaching, NHS, civil service etc.) the transfer is treated in a generous way. The public sector operates what is called the ‘transfer club’, which essentially means you get equal value for any transfer.
This is far more beneficial in the majority of transfers than the way transfers from the private sector are treated. Because it’s such a good deal it’s time limited. You must to apply for this type of public sector transfer within 2 years of joining USS.
You don’t need to have completed the transfer within 2 years. You simply need to have sent in the transfer request form. If you’re too late then you can still transfer your benefits but the service credit will be calculated differently on a commercial basis. Some schemes in the transfer club apply a 12 month period, so it’s essential you investigate a transfer from a public sector scheme as soon as possible after you have joined.
In respect of club transfers you will receive benefits on a ‘final salary’ basis. This is quite different to the Career Revalued Benefits formula. You will be credited with additional years’ and days’ service. When you leave or retire the pension is then worked out using your final pensionable salary. This is quite different to normal Career Revalued Benefits section benefits which are calculated each year based on your salary in each year and then increased to retirement in line with official pensions.
To view a list of schemes in the transfer club arrangement click here.
Private Sector scheme transfers
Private sector schemes are essentially any pension scheme that is not part of the public sector and has been approved as a pension scheme by HM revenue & Customs but also including overseas schemes in many cases.
You will receive a pension credit in the Career Revalued Benefits section. In other words, for the amount of the transfer value we will work out how much extra pension you can receive. This amount of pension will then simply be added to the amount of pension you have already built up in the Career Revalued Benefits section of USS. After the transfer has been received the additional pension is increased in exactly the same way as your main benefits.
This method of calculation will apply to public sector transfers if you are not eligible for a ‘club’ transfer because you did not request the transfer within 2 years of joining USS.
Is there any type of pension scheme that can’t be transferred?
Yes, you cannot transfer policies known as Free-standing AVCs into USS, nor into Money Purchase AVCs. Also, we cannot guarantee that overseas transfers can be accepted. On rare occasions it’s not possible to transfer benefits to USS. You would be told if this applied to you and the reason.
Need help deciding?
You may want advice on a transfer. Unfortunately neither USS nor your employer can advise you. We can give you plenty of information, but you must decide yourself whether or not to transfer.
Please read the Transfer In factsheet for more detailed information and if you need financial advice click here to find a suitable adviser, but remember this advice may not come cheap so you’ll need to balance that with the value of benefits you’re transferring over.