Maximising your pension 

1. Buy extra service in USS (called the Added Years AVC) by regular or lump sum contributions:
   • Pay up to an extra 15% of your annual salary into this AVC
   • You know from day one the amount of service you will buy at the end of the contract
   • Extra pension and tax-free cash based on extra service and salary close to retirement
   • You can get a quote for the cost of buying extra years with the Added Years AVC modeller.
   • If you are interested complete an USS added years AVC enquiry form and pass it to the pensions contact at your institution to deal with.
2. Pay into a Money Purchase AVC by regular or lump sum contributions. This is an investment-based facility but you have the choice of where your money is invested:

• Pay a large proportion of your available earnings into this AVC (and still receive tax relief, assuming your payments are within the limits explained below)
• You choose where the money is invested and therefore the level of risk
• Option to take all the fund as tax-free cash at retirement (subject to an overall limit)
• Option to buy a pension (called an annuity) with the fund, from Prudential, another provider or from USS when you retire (see the Prudential conversion tool).
• Flexible so that you can reduce or have breaks in your contributions

If you want more information about the Prudential Money Purchase AVC give a call on: 

Tel: 0800 515 914 (existing members call the customer call centre on 0845 600 0343)

Or complete a Money Purchase AVC information enquiry form which will arrive directly at prudential once completed and submitted.

If you get the opportunity at your institution take up the offer of a face-to-face meeting with a Prudential representative. Speak to your pensions contact to see if this is an option. 

Alternatively, visit the Prudential website here where you can view the latest investment fund reports.

Access your Prudential account online:

Click here to be taken to the Prudential website.

USS members have access to:

• Fund values
• View individual contribution/plan records
• Switch funds
• Redirect contributions
• Change Personal details

When logging on for the first time, you will need your username and password:

• The username is the Plan code (U291) followed by your 9-digit National Insurance number (without any spaces)
• The password is your National Insurance number.

Example:
Username: U291AB123456A
Password: AB123456A

You will be prompted to change your password the first time that you access the site.

Maximum contribution to USS Money Purchase AVCs

There is a limit set by USS to the maximum you can pay in to the USS Money Purchase AVC, as follows:

Annual Allowance £50,000 (or annual salary of lower)

Less standard USS contributions

Less additional contributions to the USS Added Years AVC   

So, if your salary were £85,000 and a you paid 3% to the Added Years AVC facility, then the maximum MPAVCs you can pay will be limited to:-

£50,000 – ((£85,000 X 7.5%) + (£85,000 X 3%)) = £41,075.00 pa or £3,422.00 pm.

If you receive a salary increase during the year then of course you may increase your USS Money Purchase AVCs in proportion.

Maximum benefits

HM Revenue & Customs (HMRC) introduced a new tax system for pension schemes from April 2011.  The new system creates 'allowances' for the maximum pension benefits that members can accrue in a tax preferential way. 

There are two different allowances:

1. The Lifetime Allowance (LTA) 
2. The Annual Allowance (AA)

These allowances are relatively high and generally affect members with higher than average salaries and long service in the scheme.But, under this tax system, members can pay into Added Years AVCs and the USS Money Purchase AVC (administered by Prudential) or an alternative arrangement outside USS. 

However, the maximum annual benefit accrual (growth in the value of your benefits in one year) is subject to a maximum that can attract tax relief, this being the Annual Allowance.

If your annual benefit accrual or final retirement benefits exceed either the AA or LTA then a tax charge is made to the excess value. Full details are available from the limits to tax relief and tax-free benefits factsheet.

Impact on USS AVC options – if you’re increasing your benefits then you will be using up some of either your Annual or Lifetime Allowance.

For Money Purchase AVCs the calculation is easy, simply add the gross contribution into the Annual Allowance calculation, or the total fund value in to the Lifetime Allowance calculation.

For Added Years, if you are paying regular monthly contributions, you are purchasing additional service gradually over time. For example, if you were buying an extra year of service over a 10 year period then for each year you would be securing 1/10th of the total service, this additional service is added to the value of your benefits for AA purposes at the end of each year.

If you choose to buy extra service by lump sum, the full amount of service being purchased will be added to the ‘closing value’ in the Annual Allowance calculation.

You are contracting to buy service gradually over time (unless you are paying by lump sum), but for the purpose of the Annual Allowance you must add in the full value of the service that will be purchased by the end of the contract into the ‘closing value’ of the Annual Allowance calculation. You should consider this very carefully if you are thinking about added years.

If you’re not sure what’s best, you should seek financial advice. Please click here to view a list of financial advisers living locally to you. See the factsheet ‘Limits to tax relief and tax-free benefits' for full information.

Full information on the AVC options can be found in the AVCs factsheet and you can also speak with the pensions contact at your institution for more information and help.