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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 pension, like ill health retirement or if you retire early. 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 your pension with us or may do so in the future, you can estimate the value using our Benefit Illustrator. If you have savings in the Investment Builder too, you can find out the value in My USS. You can also use the illustrator to check what you could have at different retirement ages, or with additional contributions.

The factors are generally 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, or refraining from 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 2021.

Taking your pension early - early retirement factor

This factor is used to reduce your pension payments when you retire early as you’ll be receiving your pension for longer. The amount of pension you’d expect at your Normal Pension Age (NPA) is multiplied by the percentage listed below for the number of years before the Normal Pension Age.

Working past your Normal Pension Age - late retirement factors

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

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.

  • If you were 65 before April 2016, and are still paying in to your pension, your late retirement factor would be a combination of all three columns.
  • If you were 65 between April 2016 and October 2020, and are still paying in to your pension, your late retirement factor would be a combination of two tables: April 2016-October 2020 and Post October 2020.
  • If you are 65 after October 2020, and are still paying in to your pension, then benefits built up before 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 were 66 after October 2020, and are still paying in to your pension, then benefits built up from 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, 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 pension to increase your cash lump sum at retirement. The factor used is dependent on the age you retire and is reviewed annually.

To calculate this, 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 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 Investment Builder or MPAVC savings to extra pension

This factor would be used when you’re using Investment Builder (or MPAVC) savings to create extra pension. 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 pension amount. These figures are for full years. If your calculation is done part way through a service year, e.g. four months, then what you calculate, based on the below figures, may be different to what you actually get. If you have a spouse’s pension, this will affect and increase their benefits as well as yours.

Pension calculation for the first two years of membership - short service conversion

This factor would be used to calculate your Retirement Income Builder pension if you leave and have paid in for less than two years. This would not affect any Investment Builder savings you may have.

The calculation of your Retirement Income Builder pension takes the contributions you paid (excluding contributions paid to the Investment Builder) divided by the contribution % (minus a contribution deduction) and adds this to a compound interest at the rate of 1% per annum. This total is then multiplied by the contribution conversion factor for the age you are when you left USS. If you pay your pension by salary sacrifice, the amount your employer paid on your behalf would be used. It assumes you retire at the Normal Pension Age (NPA). The factors assume that your pension and cash lump sum will increase in line with CPI inflation before and after retirement. This factor is reviewed annually. There are no adjustments for leaving partway through a year.

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.

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