What about tax?

You make contributions to USS which are tax-free. These contributions are used to build up your pension savings. The Annual Allowance (AA) is the maximum amount of pension savings you can build up each year before you get a tax charge.

The standard AA is currently £60,000 per tax year. If you build pension savings over this you may incur a tax charge. Find out more on the AA.

For more information and options on how to manage your AA, take a look at Voluntary Salary Cap (VSC) and Scheme Pays.

If you’re 55* or over, you can start taking your Investment Builder savings (or any other defined contribution pot you may have) flexibly.

* The government has announced they’ll raise this to age 57 in 2028 for certain members. Depending on where you are in your retirement journey, this could impact how early you can access your USS benefits.

HMRC introduced a limit to stop these savings from being taken out and then repaid into another pension scheme for extra tax relief. This limit is known as the Money Purchase Annual Allowance (MPAA).

The MPAA limits how much you can pay into a defined contribution arrangement before you need to pay tax. The limit is currently £10,000 per year.

Find out the ins and outs of the MPAA.

The Lifetime Allowance (LTA) is the limit on the amount you can take from your pension savings before you’re charged tax. Currently, the LTA still applies and is set at £1,073,100 but may be higher if you have an LTA protection. From 6 April 2023 the LTA tax charge was abolished, but you may still need to pay some tax depending on how you take your benefits in excess of the LTA.

Find out what you need to know about the LTA.