The USS pension tax relief checklist

Man with pen and calculator

The beginning of a new year is the time when many of us try to get our affairs in order. One thing that shouldn’t be missed off your to-do list is making sure you’re on track with your pension savings.

Most USS members (who joined the scheme before 31 March 2017) will have recently received their USS annual member statements - making it the perfect time for you to review your pension benefits to date.

Your annual member statement will help you plan for your retirement and includes important information on your USS benefits, as well as information to help you make the most of any pension tax relief allowances you’re entitled to. To make sure you don’t overlook any of the key benefits or imminent deadlines that may apply to you, we’ve outlined our pension tax relief checklist you may wish to complete.

If you have not yet received your annual member statement, please speak to your employer’s pension contact in the first instance.

Please note that the Voluntary Salary Cap (VSC) deadline for the next financial year is 3 March 2018. See section six for more details.

Our pension tax relief checklist

1. Check your USS annual member statement to find out how much of your annual allowance (AA) you used last year.

In your annual member statement, you’ll be able to find out the value of the benefits you earned for the tax year ending 5 April 2017. Compare this to the AA for the 2016/17 tax year, to see if you are affected by the AA. If your annual pension savings exceed the AA, you may need to pay tax on the amount above the AA. Remember, the AA applies to your total pension savings, so check your statements from other pension schemes if you have made pension savings elsewhere.

If you have an AA excess tax charge and would like to pay the charge from your USS Investment Builder savings rather than your own savings, you will need to submit a Scheme Pays form. Please note any Scheme Pays payments made after 31 January 2018 will accrue late payment penalties from HMRC, so if you still wish to submit a Scheme Pays request you will need to do so ASAP to minimise any penalties.

The standard annual allowance for the 2016/17 and 2017/18 tax years is £40,000.

Need more information about the AA? Take a look at our AA factsheet.

2. Use our annual allowance modeller to estimate if you have any unused AA this year, or if you could incur a tax charge.

If you do have any unused AA, you may want to think about making additional pension contributions tax-free to take advantage of the pension tax relief benefits available to you. This means, up to a certain limit, you can save more for the future without having to pay tax on your pension savings. Additional contributions can be made by logging in to or registering with My USS.

Please note: USS cannot advise you of your personal allowances.

Please speak to your employer’s pension contact about payroll deadlines for additional contributions this tax year.

60k member modellers

You can also use our annual allowance modeller to get an estimate of the AA used up by your USS benefits over the 2017/18 and 2018/19 tax years. This will show you whether you are likely to incur a tax charge on your benefits.

Try out our annual allowance modeller now.

Members with taxable income in excess of £110,000 will need to consider the effect of the HMRC taper on their AA.

You can find out more about the AA taper in our AA factsheet.

3. Read your USS annual member statement to check the lifetime allowance (LTA) value of your USS benefits at 31 March 2017.

Your annual member statement includes the LTA value of your USS Retirement Income Builder benefits and your USS Investment Builder savings (if any) as of 31 March 2017. Although there’s no limit to the amount of pension savings you can build up, the LTA means you’ll have to pay an additional tax charge when you take benefits on any savings above the LTA.

The HMRC lifetime allowance is currently set at £1 million for the 2017/18 tax year.

Learn more about the LTA in our factsheet.

4. Keep track of your USS Investment Builder savings.

Your statement shows any savings you have in the USS Investment Builder at 31 March 2017, and where they are invested. You can keep track of how the funds are performing by logging in to My USS and viewing our fund factsheets and comparable fund performance page.

Watch our animated guide to find out more about your investment choices with the USS Investment Builder.

Over 50k members

5. Check your USS annual member statement to see when you last updated your Expression of Wish details.

Not sure if you’ve updated your Expression of Wish details? Check your annual member statement to see if your Expression of Wish form is up-to-date. The Expression of Wish form lets us know who you would like to receive any bereavement benefits.

Every member should complete this form and remember to update it every three years. Complete or update your Expression of Wish form here.

6. Set your Voluntary Salary Cap (VSC) for the next financial year by 3 March 2018 if you want to manage your tax position in relation to the LTA or AA.

If your pensionable salary is over the USS salary threshold (£55,550 for 2017/18), you can use the VSC to cap the amount of benefits you build up in the scheme.

The VSC can be set at any level between your pensionable salary and the salary threshold, £55,550 for 2016/17. Setting the cap at a lower level will reduce the amount of the AA that you use up, but will also reduce the amount of benefits you build up in the USS Investment Builder. An estimate of the amount of annual allowance you would use up in USS at different salary cap levels is shown below:

Salary Cap £55,500 (minimum) £70,000 £80,000 £100,000 £120,000
Estimated annual allowance used up* £15,000 £17,000 £19,000 £23,000 £27,000

* Figures assume no additional contributions (such as the match) are paid.

VSC election form

Find out more about the VSC using our VSC factsheet.

When you receive your annual member statement, make sure you take the time to ensure you’re on track with your retirement savings, and are making the most of the benefits available to you.

To make a start on our pension tax relief checklist, take a look at the further reading options below.

  • The annual allowance modeller – get an estimate of the AA used up by your USS benefits over the 2017/18 and 2018/19 tax years.
  • USS factsheets – get up to speed on the AA, LTA and VSC by taking a look at our tax factsheets.
  • Infographic – take a look at our infographic for a quick reminder of the pension tax relief benefits and deadlines USS members need to know.

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.