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Factors used by USS

What they are and how they're used

Factors are numbers we use to calculate several different things in relation to your Retirement Income Builder pension, like if you retire early or late. They allow us to work out how much pension to pay you.

Below are the most common factors we use, and some examples of how they are used.

If you’re building a Retirement Income Builder pension with us or may do so in the future, you can estimate the value of the pension at retirement using our Benefit Calculator in My USS. If you have savings in the Investment Builder too, you can find out their value in My USS. You can also use the calculator to check what you could have at different retirement ages, or with additional contributions.

The factors set out below are set by the trustee, having taken advice from the Scheme Actuary. They are reviewed regularly to make sure they remain appropriate, taking into account (amongst other things) the Scheme Rules, legislation, economic factors and the approach to funding. We will continue to review and update our factors as appropriate. As such, they are subject to change from time to time and you should not rely on the factors set out below when making any decisions, in relation to your USS benefits and/or your retirement. The factors on this page and the examples below are correct as at 1 April 2023.

Taking your pension early - early retirement factor

This factor is used to reduce your Retirement Income Builder pension payments when you retire early before your Normal Pension Age (NPA) as you’ll be receiving your pension for longer. The amount of pension you’d expect at your NPA is multiplied by the percentage listed below for the number of years before the Normal Pension Age that you retire. There are different factors that apply to benefits built up before and after 1 April 2022.

Note that the normal minimum pension age at which a member can retire early (unless retirement is due to incapacity) is age 55 and this is due to rise to age 57 on 6 April 2028.

Working past your Normal Pension Age - late retirement factors

Please note: This may not apply if you are no longer paying in to USS. See your options at different ages and stages for more information.

This factor is used to increase your Retirement Income Builder when you retire late, after your Normal Pension Age (NPA) as you’ll be receiving your pension for a shorter length of time. The amount of pension you’d expect at your NPA is multiplied by the number listed below for the number of years and months after the NPA that you retire.

This is a little more complicated as there are different factors for the different periods for when you reached and exceed your NPA. These are defined as pre-April 2016, April 2016-October 2020 and post October 2020. The NPA changed from 65 to 66 on 6 October 2020 (and will continue to rise in line with the State Pension age going forward).

  • If you reached age 65 before 1 April 2016, and are still paying in to USS, your late retirement factor would be a combination of all three columns.
  • If you reached age 65 between 1 April 2016 and 30 September 2020, and are still paying in to USS then benefits built up before age 65 late retirement factor would be a combination of two tables: April 2016-October 2020 and Post October 2020.
  • If you reached or will reach age 65 after 30 September 2020, and are still paying in to USS, then benefits built up before 1 October 2020 will receive a late retirement uplift based on how long after age 65 you’ve remained in the scheme, and this late retirement factor would be from the Post October 2020 table.
  • If you reached or will reach age 66 after 30 September 2020, and are still paying in to USS, then benefits built up from 1 October 2020 to age 66 will receive a late retirement uplift based on how long after age 66 you’ve remained in the scheme, and this late retirement factor would be from the Post October 2020 table.

The Post October 2020 factors are calculated differently from the other periods. These are compound calculations – multiplying the factor by itself for the number of months past NPA that you retire, and that amount by the amount of pension you’d expect at your NPA.

Taking less pension and more cash lump sum at retirement – commutation factor

This factor would be used when you’re using some of your Retirement Income Builder pension to increase your cash lump sum at retirement. The factor used is dependent on the age you retire and how your benefits are split between those built up before and after 1 April 2022, and is reviewed annually.

To calculate the lump sum obtained by the exchange, we multiply the amount of pension to be exchanged by the relevant factor.

Taking more pension and less cash lump sum at retirement – reverse commutation factor

This factor would be used when you’re swapping some, or all, of your cash lump sum for extra Retirement Income Builder pension. The factor used is dependent on the age you retire and is reviewed annually.

The amount of cash lump sum you’re exchanging for extra pension would be divided by this factor to create an extra pension amount.

Converting your Prudential Money Purchase Additional Voluntary Contribution (MPAVC) savings to extra Retirement Income Builder pension

As of 1 April 2022, members no longer have the option to convert their Investment Builder savings into additional Retirement Income Builder pension. This doesn't impact any MPAVCs currently held with Prudential or any MPAVCs with Prudential transferred into the Investment Builder, these savings can still be converted into additional Retirement Income Builder pension.

This factor would be used when you’re using your MPAVCs with Prudential, or MPAVCs you’ve moved from Prudential into the Investment Builder, to create extra pension in the Retirement Income Builder. The factor used is dependent on the age you are when the conversion is applied. This factor is reviewed monthly based on market conditions and other influences.

The amount you’re converting would be divided by the relevant factor to create an extra annual pension. If you convert the fund into annual pension this will also increase your spouse’s or dependant’s pension on the event of your death.

If you have a spouse, civil partner or other dependant’s pension, this will affect and increase their benefits as well as yours.

Need some advice or guidance

If you want to seek guidance or take financial advice on the options available to you, visit the guidance and financial advice page. You’ll find a range of resources to support your planning and you can also find information on how to access an independent financial adviser.

This web page is for general guidance only. It is not a legal document and does not explain all situations or eventualities. USS is governed by a trust deed and rules and if there is any difference between this publication and the trust deed and rules the latter prevail. Members are advised to check with their employer contact for the latest information regarding the scheme, and any changes that may have occurred to its rules and benefits. For a glossary of our terms please see our important information page.