Start saving in your 20s and you’ll reap the rewards when you retire

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Published date: 27/09/17

It’s never too early to get to grips with your pension. Although, it has to be said, getting your head around the ins and outs of your pension scheme can be tricky. In fact, only last year, Bank of England Chief Economist, Andy Haldane, admitted that even he struggles to understand pensions, indicating just how confusing they can be.

However, we can all strive towards a better awareness of the benefits we’re entitled to through our pension scheme. As a USS member, you’re not only part of a secure and financially stable pension scheme, but you also have the opportunity to get ahead by making additional pension contributions, into the USS Investment Builder ensuring you’re as well-prepared as possible for retirement. And there’s a lot more to be gained by making early contributions to your pension than you might think.

By starting early, not only will you be saving for longer, the effect of compound growth could mean that the money you save at the start of your career is worth far more than the money you put away in the final years. In fact, if you saved £2,500 annually into a defined contribution pension from age 21 and stopped at 35, you could have a bigger pension pot than if you saved £2,500 annually from age 36 and stopped at 68.

Getting to know your pension scheme

As a member of the USS pension scheme, upon retirement you’ll receive the defined benefits you built-up in the USS Retirement Income Builder. These benefits, which are your retirement income and tax-free lump sum, are financially secure, protected by law and backed by over 350 employers. USS is the largest private pension scheme in the UK in terms of assets, providing a strong foundation to fund the defined benefits promised to members. There is also the assurance that our in-house investment team has outperformed its benchmark over the long-term, including the last five years to March 2017, adding £1.1 billion of value.

Want to know more about how USS is run?
Take a look at our guide to USS’s funding position in 2017.

With USS you also have the option to build up your own additional pension contributions through the USS Investment Builder, including the match. A small incremental increase to your monthly retirement savings could have a significant impact on your pension pot over time. To make additional contributions to the USS Investment Builder, simply register for or log in to My USS.

Try out the USS modelling tools to get an estimate of what your pension could be when you retire.

If you earn over the salary threshold (£55,550 for 2017/2018)*, or have recently transferred into USS from another pension scheme, you’ll already have savings in the USS Investment Builder and you can make additional contributions on top of these.

The best way to get started with the USS Investment Builder is to watch the USS Investment Builder animated guide and register for My USS. By registering for My USS, you’ll be able to manage your USS Investment Builder and contribute more into your pension – which is perfect for members who want to get ahead and start saving more for retirement.

Not quite got your head around the USS Investment Builder?
Find out how you can use it to boost your retirement income.

By understanding your pension benefits from the outset, you’ll get far more out of being a USS member. Not only can you boost the size of your pension pot, but there are other benefits to consider as well. If you want to get a better grasp of the USS pension, take a look at our online resources for more information.

Benefits that go beyond retirement income

Being a USS member isn’t just about being part of a secure and flexible pension scheme, you have additional benefits as well. For instance, USS also provides you with ill-health and absence from work benefits, as well as life cover.

Currently, 59% of USS members under 35 are unaware of the benefits available in specific circumstances to them. If you want to get up to speed with the benefits available to you as an active USS member, you can find out more here.

Take a look at our infographic to find out how well you know your USS investment and benefit options.

You can also use the USS benefit illustrator to get an estimation of your retirement benefits, which is accessible via our website. Using the USS benefit illustrator will give you a better idea of your potential future income based on current circumstances, and may help you decide whether you want to start contributing more.

Use the USS benefit illustrator to get an estimation of your retirement benefits.

Take control of your contributions

It’s never too late to start getting to grips with your pension and saving for retirement; however, the earlier you start, the better. By registering with My USS, you can take a more proactive approach towards your pension by ensuring you’re contributing the amount you need and can afford, helping you to afford the future you want.

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Not yet registered with My USS?
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Want to know more about your pension? Take a look at the further reading options below

*The salary threshold is revalued each year to take account of inflation (the rising cost of goods and services). Automatic contributions to the USS Investment Builder are based on your salary in excess of the threshold.

Important note: This publication 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 shall 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. Any references to the trustee or USSL in this document means Universities Superannuation Scheme Limited, the trustee company of Universities Superannuation Scheme and any references to the scheme or USS means Universities Superannuation Scheme. As you review this information, please keep in mind that past performance is not necessarily a guide to future performance. The value of investments may go down as well as up and the return on your investments is not guaranteed.

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