USS is a hybrid pension scheme, so it has both a defined benefit (DB) part and defined contribution (DC) part. You can read about both parts below or watch the video that explains how they work.
Retirement Income Builder
In a DB pension, like the Retirement Income Builder, you build benefits based on your salary. It’s funded by contributions from you and your employer, and it gives you an income every year for the rest of your life and a one-off, cash lump sum (tax-free up to a certain limit) of three times your pension at retirement. All members automatically join the Retirement Income Builder, and build benefits, from the contributions you and your employer pay, based on your salary up to the salary threshold.
In a DC arrangement, like the Investment Builder, contributions from you and your employer are invested based on the choices you make. The returns on those investments build up in your Investment Builder pot, and you can take this money in a variety of ways.
You automatically join the Investment Builder if you earn above the salary threshold. If you’ve made additional contributions or transferred in from another scheme in the last few years (or switched funds from Prudential), you’ll also have an Investment Builder pot. All members can choose to make additional contributions to the Investment Builder.
Visit how your pension works page, to find out more about the Retirement Income Builder and Investment Builder.