What decisions do I need to make about my pension, and when?

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It’s not always easy to be proactive when it comes to your pension. In fact, making decisions about future commitments can be something that many of us simply put off – a proven concept that’s at the heart of Richard Thaler’s Nobel Prize winning nudge theory.

Nudge theory is intended to make it easier for people to make a certain decision that is usually in their best interests, for instance, making decisions around your pension. In 2012, the UK Government introduced the automatic enrolment scheme. By removing the decision-making process from the employee, they made saving for retirement the default option.

And it’s working - according to data from the Office for National Statistics, total membership of occupational pension schemes in the UK increased by 17.1%, rising from 33.5 million in 2015 to 39.2 million in 2016.

A nudge in the right direction

Last year, a survey conducted by Aegon revealed that only 14% of people are confident about planning their retirement goals and making their own investment decisions. It’s not surprising therefore that many of us put off making financial decisions, especially when it comes to our pensions. As highlighted by Richard Thaler, having a nudge in the right direction can be the incentive we need. As a USS member, you are automatically enrolled in the scheme, but there are still a few decisions you need to make yourself with regards to your retirement.

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As a USS member, over the next couple of months you’ll be receiving your annual member statement. Your statement will update you with information about your pension savings, including how much you can currently expect to receive as an annual income when you retire.

Want a better of idea of what’s included in your annual member statement? Take a look at our blog, My annual member statement: what do I need to know?

Making the most of your pension scheme

The arrival of your annual member statement early in 2018 is the perfect prompt to think about your retirement plans. And, for members who are approaching retirement, there are a few other decisions you may also want to make. Here are some things to consider doing when your statement lands.

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1. Find out about the USS Investment Builder and how it can help boost your retirement savings. If you haven’t already done so, you can boost your retirement income by opting to contribute additional pension savings into the USS Investment Builder. The contributions you make into the USS Investment Builder benefit from tax relief and you can choose how they’re invested, or let us do that for you. You can keep track of these additional contributions and update your investment choices through My USS. To learn more about the investment choices in the USS Investment Builder, watch our investment choices animated guide.

Find out more about contributing to the USS Investment Builder and read more about how you can benefit from taking the match.

2. Register for My USS. My USS is available to all active USS members and allows you to keep track of how your USS Investment Builder savings are performing and make additional contributions to the USS Investment Builder. To register for My USS, you’ll need your USS member number, your National Insurance number and an email address. We recommend you use a personal email address.

3. Download the USS Investment Builder investment guide. If you are earning over £55,550*, are thinking about making additional pension contributions or transferring into USS from another pension scheme, you might also want to learn a little bit more about the USS Investment Builder and your options for investing these savings. The guide to investing in the USS Investment Builder provides you with the information you need.

Read the guide to investing in the USS Investment Builder

4. Use the USS benefit illustrator alongside your statement to get an estimate of much you can expect to receive at retirement. The USS benefit illustrator will give you an estimate of how much you can expect to receive at retirement. A great way to keep track of your USS pension savings, you can use the USS benefit illustrator to get an indication as to whether you are on track for the retirement you want, or if you need to make additional pension contributions.

Try out the USS benefit illustrator using our step-by-step user guide.

5. Consider your retirement options. You have a number of options when you reach retirement. When you retire can affect how you receive your pension so it’s important to carefully consider your options. Read our retirement factsheet or use the retirement decision tree to help you make informed decisions about your pension.

In a recent survey, 32% of USS members expect to retire before the age of 65 while 25% think they’ll retire over the age of 70.

6. Update your Expression of Wish form. If you die whilst paying into the scheme, your nominated beneficiaries are covered by a package of protection. You should complete an Expression of Wish form to let us know who you would like to receive these benefits.

Complete your Expression of Wish form

7. Check your annual allowance limit. Your USS annual member statement will also show the annual allowance (AA) value of your benefits for the tax year ended 5 April 2017 and the previous three input periods. If you exceed the AA limit then you may be subject to a tax charge. You are likely to be affected by the AA if your taxable income from all sources in the 2017/18 tax year will exceed or be close to £110,000.

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Find out more about the AA in our AA factsheet

Next steps

At USS, we have a wealth of information on our website designed to help you make decisions about your pension planning and retirement. There are animated guides and factsheets in our Resources section which explain all the options available to you, as well as modelling tools to help you estimate the value of your pension.

It’s important you take the time to read and understand your statement. The Retirement Planning Tool can be particularly useful for helping you make decisions about your pension, allowing you to evaluate whether you are on track for the retirement you want.

For more information about all the options available to you as a USS member, take a look at our further reading options below.

  • Factsheets and member guides – learn more about your pension scheme with our factsheets and guides.
  • USS animated guides –these animated guides are an easy way to get to grips with your pension.
  • Investment choices animated guide – if you’re thinking about making additional pension contributions into the USS Investment Builder, watch our investment choices animated guide to find out more about your investment options.
  • Retirement Planning Tool – use our retirement decision tree to help you decide whether you’re on track for the retirement you want.

*The salary threshold is revalued each year to take account of inflation (the rising cost of goods and services). Automatic contributions 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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