Thinking about the future – what your USS membership gets you

It’s around about now that a lot of our members start to really think about their future, as they plan their well-earned retirements to coincide with the end of the academic year.

Whether your retirement’s just around the corner or a long way off, it’s handy to know what you could get from your USS membership. That way, you can do some serious prep or just sketch out some light-touch ideas for the future.

The most important thing you get from being a member is the Retirement Income Builder. This is a defined benefit (DB) pension, which some experts describe as ‘the gold standard'.

A DB pension like the Retirement Income Builder promises you a pension for life, and it’s increased each year, so as the cost of living goes up so do your pension payments.

There’s also flexibility – you could get a lump sum (tax-free to a certain limit), as well as monthly pension, and you can dial up that lump sum and choose a lower pension or dial it back and get a higher payment each month.

The pension benefits you get from the Retirement Income Builder are based on how much you and your employer pay in and for how long – the longer you contribute, the more you’ll get out of it.

But it’s not just a bunch of money to fund your retirement. There are some other benefits and features that you might not have thought about:

  • You get life cover of three times your salary to take care of loved ones if you die while paying into the scheme.
  • There are Ill health benefits too, if you’re not able to work.
  • Your loved ones, including a spouse or civil partner and children, could be eligible for a USS pension after you die.
  • You get a fair chunk of tax relief on your contributions, so every £100 you pay in effectively only costs you £80 if you’re a basic rate tax payer, and it’s just £60 if you pay the higher rate.
  • Your employer pays significant contributions to your USS pension, helping to fund what you’ll get in retirement.

All our members get the benefits of the Retirement Income Builder, but it’s not the be-all and end-all of USS. As a hybrid scheme, we also provide a defined contribution (DC) pension – the Investment Builder.

With DC arrangements, any contributions you and your employer make are invested to build your own savings pot.

If you earn above the salary threshold or you transfer funds from another scheme into USS, you’ll automatically join the Investment Builder. You can also choose to join it, by making additional contributions.

Whichever way you build your Investment Builder pot, you’ll have a range of funds to choose from, or you can choose to let us make the investment decisions for you.

The Investment Builder also offers a range of flexible ways to access the pot you build up, and you don’t even have to be retired – you can do it from age 55.

This year, we added Private Market Assets to the Investment Builder, aiming to boost long-term value and stability – and not many DC arrangements have been as quick to do that.

Alongside the valuable benefits and options you get as a member of USS, you can be sure that we’re driving value in as many ways as we can, like delivering cost savings through our in-house investment management approach, which is £49 million cheaper than schemes of a similar size and complexity that outsource.

And our size and scope gives us influence, which we use to be responsible stewards of the businesses in which we invest on your behalf.

You can find out a lot more about how we invest on our website, like our recent announcement to stop investing in tobacco and thermal coal mining, and you can read more about responsible investment and get a flavour of USS from our blogs.

Find out more about what being a member gets you and check out articles that will help you plan for the future in our member news and features.

For a glossary of our terms please see more information on our important terms page.

Published: 28 July 2020.