USS launches new ‘cash payments’ product

For information

What are cash payments?

The cash payments product enables members over age 55 to take up to four payments from their USS Investment Builder fund each calendar year, without retiring. It’s the name that we’ve given to Uncrystallised Funds Pension Lump Sums (UFPLS).

Members will be able to continue to pay into their USS Investment Builder pot.

What are the tax implications?

Taking cash payments will trigger the Money Purchase Annual Allowance (MPAA), which is currently £4,000. Once members have taken a cash payment, from USS or any other DC scheme, the limit will apply for life. There is more information in the annual allowance factsheet.

Members may also slip into a higher tax band, depending on any other income they receive and the size of the cash payment you take.

They’ll initially pay emergency tax on the cash they take, which may need to be corrected through self-assessment.

What does it mean for employers?

There will be no additional administration for you associated with cash payments. If you, or your members, are interested in cash payments you can find out more online from our website, including our factsheet about the various ways to take DC savings, and our factsheet on cash payments, which provides more information on tax implications, eligibility and other considerations. They’ll apply directly to USS, and if they take a cash payment they’ll still continue contributing in the normal way.

What information exists for members?

There’s a lot for members to consider before taking cash payments, for example the impact on their death-in service and incapacity benefits.

We’ve updated our website and created factsheets about cash payments to make sure that members can find out what they need to know. We’ve also updated all of our existing factsheets and information to make sure that they properly reflect this new option. The upcoming member update includes a special article all about cash payments.

If you get queries from members please direct them to this information online and the online application form.

How will members apply?

If, after reading all the information we provide, members want to take a cash payment they can download our application form.

If you would like more information please contact the Transfers team via email or on 0151 556 0627.