Your pension is changing

1. Salary threshold change

The salary threshold will increase from £41,004 to £70,296.

You would still see 20% of your salary above the salary threshold going into the Investment Builder, the defined contribution (DC) part of USS. However, the higher threshold means the same overall contributions from you will build more guaranteed income in the Retirement Income Builder, the defined benefit (DB) part of USS and no longer build as much DC savings in the Investment Builder.

This salary threshold will be increased annually until 31 March 2028 in line with increases to official pensions, which broadly go up with CPI inflation, subject to certain limits. Currently this is limited to a maximum increase of 2.5% a year but from 1 April 2024 the £70,296 figure will rise in future years by a maximum of 10% (see the explanation of pension increases for how this will apply).

For a refresher on how the DB and DC parts of USS work, see how your pension works.

2. A higher accrual rate for your defined benefit pension

The rate at which you build defined benefits in the Retirement Income Builder will increase.

Currently you build 1/85 of your salary (up to the salary threshold) in defined benefit (DB) pension each year and 3/85 of your salary as a lump sum on retirement. This will increase for each year from 1 April 2024 to 1/75 of your salary for pension benefits and 3/75 of your salary for the lump sum, respectively.

Watch our video to see a reminder on how you build benefits in the Retirement Income Builder.

1. Remember you’re already paying less too

Since 1 January 2024, your member contributions have reduced from 9.8% of salary to 6.1%. Your employer’s contribution has also reduced from 21.6% to 14.5%. This does not affect the level of pension benefits you build up.

See how much you now pay by using our Contributions & Tax Calculator in My USS.

2. Benefit uplift

This April you’ll receive a one-off uplift to your Retirement Income Builder (DB) benefits. This uplift will give you an extra £215 annual pension at retirement and an associated £645 lump sum. Like your existing Retirement Income Builder benefits, it will be subject to USS standard pension increases.

3. Higher cap for future pension increases

The benefits that you have built up in the Retirement Income Builder increase every year both before and after you retire in line with increases to official pensions which currently go up with CPI inflation. This provides a level of inflation protection for your benefits.

The annual increase for benefits built up from 1 April 2022 was to be subject to a maximum increase of 2.5% (coming into effect for increases from 1 April 2026). The changes mean these benefits will now be subject to a higher maximum increase of 10% rather than 2.5%. Increases will be as follows:

• Where inflation (currently CPI) is 5% or less, the increase will be matched.
• Where inflation is more than 5% but less than 15%, the increase will be 5% plus half of the percentage increase over 5%.
• Where inflation is 15% or more, the increase applied will be 10%.