Maximising your pension

If you want to start paying more in to USS you can do via the USS Investment Builder.

The match

If you wish to take up the employer match and pay an additional 1% contribution into the USS Investment Builder, your employer will automatically match this contribution. Any contribution you pay over the 1% will not be automatically matched.

The USS Investment Builder

Contributions are invested on your behalf and any returns on those investments are added to your USS Investment Builder. For those who do not wish to make an active investment choice a default strategy will be provided. For those who do not consider this suitable, or for those who wish to actively manage their investments, there will be a range of self-select fund options available.

The range of funds on offer will give you the flexibility to choose the level of risk you are comfortable with and target the level of return you wish to achieve, or to choose a fund that satisfies your own investment beliefs and preferences.

When you retire you can access your USS Investment Builder in a number of ways:

  • take as a lump sum, which may be tax free in whole or in part or;
  • provide a regular monthly income; or
  • a combination of these options.

For more information on the funds and options that will be available please refer to the USS Investment Builder overview.

You may wish to seek financial advice when deciding how to access your USS Investment Builder, particularly around the tax treatment of this money.

An update on money purchase AVC arrangements

If you have ever paid, or are currently paying additional voluntary contributions (AVC) into the money purchase arrangement with Prudential you may wish to read the recent update provided here.

Prudential provides a range of funds within the money purchase AVC arrangement which fall into two main categories; known as ‘with-profits’ and ‘unit-linked’. If you are not sure which type you hold check the yearly statement that you will have received from Prudential.

Regardless of which type of fund (or funds) you have you will be able to continue to pay into a money purchase AVC arrangement with Prudential until 30 September 2016.

After that date a transition to the new defined contribution (DC) section of USS, the USS Investment Builder is planned.

For more about the changes to USS’s money purchase AVC arrangement with Prudential please refer to the factsheet.

I am currently paying an AVC to secure additional service

For members of the previous final salary scheme with AVC arrangements already in place the benefits earned from AVC arrangements will be based upon total service secured by the AVC and pensionable salary as at 31 March 2016.

You can cancel your AVC arrangement at any time. If you do so then the service purchased by the arrangement will be reduced accordingly. This also applies if AVCs cease before normal pension age due to early retirement or ceasing to be an active member.

If you are paying AVCs as a member of the previous career revalued benefits scheme either as a one-off lump sum payment, or through regular instalments, any annual pension which you have completed the purchase of before 31 March 2016 will be included in the calculation of the benefits you have built up as at 31 March 2016, and then increased in line with the increases in official pensions.

If you are paying into a regular instalment AVC that started before 31 March 2016, we will assume that you will continue to make payments to complete the purchase of your additional annual pension unless you tell us otherwise.

For more information please refer to the USS member guide - Your guide to Universities Superannuation Scheme.

Tax relief

One attraction of paying more in to a pension scheme is that you currently receive tax relief on those contributions.

For example, if you make a contribution of £100, as a standard-rate tax-payer this will cost you £80 from your take-home pay. If you’re a higher-rate tax-payer the cost will be £60, based on current income tax rates.

Are there any limits to how much I can build up?

There are limits to the amount you can build up tax-efficiently – these limits are set by HM Revenue & Customs. For more information on this please visit the Tax considerations section.

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