Factors used by USS

For example, if your NPA is 66, you joined USS after 1 October 2011 and you want to retire as an active member before 1 October 2024 at the age of 59:

• Benefits built up between 1 October 2011 and 5 October 2020, which have an NPA of age 65, will be reduced based on you retiring six years early, by applying the current factor 79.8% to those benefits.
• Benefits built up from 6 October 2020 onwards, which have an NPA of 66, will be reduced based on you retiring seven years early, by applying the current factor 77.1% to those benefits.

If instead you want to retire on or after 1 October 2024 then the calculation is unchanged but the respective factors will change to:

• Benefits built up between 1 October 2011 and 5 October 2020, which have an NPA of age 65, will be reduced based on you retiring six years early, by applying the 1 October 2024 factor of 74% to those benefits.
• Benefits built up from 6 October 2020 onwards, which have an NPA of 66, will be reduced based on you retiring seven years early, by applying 1 October 2024 factor of 70.6% to those benefits.

A member turns 65 on 1 February 2019 and retires on 31 March 2025 having continued to contribute in full to USS until they retire.

Their continued active membership of USS after age 65 runs across all of the periods detailed above with the exception of the first period, and the late retirement factor will therefore be a combination of three columns. We therefore calculate it in three parts:

1. From 1 February 2019 – 30 September 2020 – 1 year and 8 complete months, calculated as follows:
   
   1 year factor – 0.042
   2 year factor – 0.084
   
   1 year 8 month factor = 1 year factor + (2 year factor – 1 year factor) x 8/12 = 0.042 + (0.084 – 0.042) x 8/12 = 0.07


2. From 1 October 2020 to 31 March 2024 – 3 years 6 months, calculated as follows:
   
   3 year factor – 1.134
   4 year factor – 1.1826
   
   3 year 6 month factor = 3 year factor + (4 year factor – 3 year factor) x 6/12 = 1.134 + (1.1826 – 1.134) x 6/12 = 1.1583


3. From 1 April 2024 – 1 year (April 2024 to retirement at the end of March 2025), calculated as follows:
   
   1 year factor – 1.0554
   2 year factor – 1.1138
   
   1 year factor = 1 year factor + (2 year factor – 1 year factor) x 0/12 = 1.0554 + (1.1138 – 1.0554) x 0/12 = 1.0554


4. The final factor is then determined by combining these factors. The first period is added to 1, and the result is multiplied by the other factor:
   
   (1 + 0.07) x 1.1583 x 1.0554 = 1.3080

Any benefits built up before age 65 will be increased by 30.80%.

A member turns 65 on 1 April 2020, and retires on 31 March 2025 having continued to contribute to USS until they retire.

Their continued membership after 65 runs across three of the periods detailed above, and the late retirement factor will do the same. We therefore calculate it in three parts:

1. 1 April 2020 – 30 September 2020 – 0 years 6 months (April 2020 to September 2020) calculated as follows:
   
   0 year factor – 0
   1 year factor – 0.042
   
   0 year 6 month factor = 0 year factor + (1 year factor − 0 year factor) x 6/12 = 0 + (0.42 − 0) x 6/12 = 0.021


2. From 1 October 2020 to 31 March 2024 – 3 years 6 months, calculated as follows:
   
   3 year factor – 1.134
   4 year factor – 1.1826
   
   3 year 6 month factor = 3 year factor + (4 year factor – 3 year factor) x 6/12 = 1.134 + (1.1826 – 1.134) x 6/12 = 1.1583


3. From 1 April 2024 to 31 March 2025 – 1 year factor, from the table this is 1.0554.


4. The final factor is then determined by combining these factors. The first is added to 1, and the result is multiplied by the other factors:
   
   (1 + 0.021) x 1.1583 x 1.0554 = 1.021 x 1.2224 = 1.2481

Any benefits built up before age 65 will be increased by 24.81%.

The late retirement uplift that applies from age 66 (to benefits built up before age 66, from 1 October 2020 onwards), may only apply where your 66th birthday falls after 5 October 2020, and therefore the factor is always calculated based on the last two tables alone.

A member turns 66 on 1 December 2023, and retires on 31 March 2025. The factor is calculated as follows:

From 1 December 2023 to 31 March 2024 – 0 years 4 months (from 1 December 2023 to 31 March 2024), calculated as follows:

0 year factor – 1

1 year factor – 1.0428

0 year 4 month factor = 0 year factor + (1 year factor – 0 year factor) x 4/12 = 1 + (1.0428 – 1) x 4/12 = 1.0143

From 1 April 2024 to 31 March 2025 – 1 year factor, from the table this is 1.0554.

The final factor is then determined by combining these factors using multiplication:

1.0143 x 1.0554 = 1.0705

Any benefits built up before age 66 after 1 December 2023 will be increased by 7.05%.

These figures are for full years. If your calculation is done part way through a service year, e.g. four months through a service year, then the calculation based on the below figures, may be different to what you actually get. The current factors (1 April 2024 column) are subject to change.

For example, if you retire at age 58 and three months, your commutation factor is worked out as follows.

• Factor at 58 y 3 m = Factor at 58 + [(Factor at 59 – Factor at 58) x 3/12] = Factor to be used
• 18.859 + [(18.495 – 18.859) x 3/12] = 18.859 + (-0.091) = 18.768

This means that for every £100 per annum of Retirement Income Builder pension you exchange, you will receive £1,876.80 (100 x 18.768) of lump sum in return.

These figures are for full years. If your calculation is done part way through a service year, e.g. four months through a service year, then the calculation, based on the below figures, may be different to what you actually get.

For example, if you retire at age 58 and three months, your reverse commutation factor is worked out as follows.

• Factor at 58 y 3 m = Factor at 58 + [(Factor at 59 – Factor at 58) x 3/12] = Factor to be used
• 23.96 + [(23.36 – 23.96) x 3/12] = 23.96 + (-0.15) = 23.81

This means that for every £1,000 of lump sum you exchange, you will receive £42.00 (1,000 / 23.81) of gross annual Retirement Income Builder pension in return.

These figures are for full years. If your calculation is done part way through a service year, e.g. four months through a service year, then, based on the below figures, may be different to what you actually get.

For example, if you retire at age 58 years and 3 months and the illustrated factors apply at the date of your retirement, your conversion factor is worked out as follows:

Factor at 58 = 26.2
Factor at 59 = 25.6

• Factor at 58 years 3 months = Factor at 58 - [(Factor at 58 − Factor at 59) x 3/12] = Factor to be used
  
  26.2 – [(26.2 - 25.6) x 3/12] = 26.2 – 0.15 = 26.05

This means that for every £1,000 of Prudential MPAVC fund you exchange, you will receive £38.39 (1,000 / 26.05) of gross annual pension in return.

The factors are reviewed monthly and depend on the prevailing market conditions. For the purposes of use in illustrating the calculation, sample rates are shown below. These factors are unlikely to be those that will actually apply in your case.