Benefits earned before April 2016

Were you a member before 1 April 2016?

If you were a member of USS before 1 April 2016 you will have built benefits in either the final salary or career revalued benefits section of the scheme. For more information on these benefits and how they are treated going forward please refer to the information below.

Career Revalued Benefits

You will have been a member of this section if you first joined USS on or after 1 October 2011. Up to 31 March 2016 you will have built benefits at a rate of 1/80th of your salary for each year of membership. This is based on your full pensionable salary.

From 1 April 2016 you will have built benefits at a faster rate (1/75th) in the USS Retirement Income Builder, with a salary threshold applicable from 1 October 2016, meaning your benefits will be worked out using salary up to the salary threshold. The total benefits you build up are increased in line with our standard pension increases.

In future, your annual statements will show the benefits you have earned up to and including 31 March 2016, the benefits you earn from 1 April 2016 in the USS Retirement Income Builder, plus the current value of any funds you may have built up in the USS Investment Builder.

Former final salary section members

The final salary section closed on the 31 March 2016. At this point your total benefits up to 31 March 2016 were calculated based on how long you've been a member of the scheme and your pensionable salary at that point in time. This calculation is carried out using a formula known as ‘smoothing out’.

 Smoothing out – how it works

The Trustee determines a member’s salary for each period of 12 months that they have been a USS member, over a maximum time of 13 years previous to the date on which his/her pensionable salary is to be calculated. Each of those 12 month periods is revalued, except the last 12 months, using the Retail Prices Index measure of inflation.


The pensionable salary is whatever comes out best from that calculation - either the highest revalued annual salary during the last three years or the highest revalued salary averaged across any three consecutive ‘best years’ over the last 13 years.

The pension and cash value that results from this calculation will be increased between 1 April 2016 and the date you retire in line with USS's standard pension increases. This is explained in our revaluation factsheet.

At retirement you will receive the final salary benefits built up to the 31 March 2016 as a service credit which will be added onto any further benefits accrued under the scheme from April 2016 onwards. For more information please refer to the USS member guide.

Statements detailing the amount of your former benefits in the final salary section were distributed to members towards the end of October 2016, for more information about these statements and what they include please see the Final salary closure statements section.

When presented with your options at retirement, your former final salary benefits and USS Retirement Income Builder benefits will be combined and shown as an annual pension plus a one-off, tax free cash lump sum. Options for any benefits that you've built up in the USS Investment Builder section will include the ability to draw these funds as a tax free lump sum subject to HMRC's lifetime allowance rules.

Final salary and Career revalued benefit AVCs

For former final salary scheme members with AVC arrangements already in place, the benefits earned from AVC arrangements will be based upon total service secured by the AVC and pensionable salary as at 31 March 2016.

You can cancel your AVC arrangement at any time. If you do so, then the service purchased by the arrangement will be proportionally reduced. This also applies if AVCs cease before normal pension age due to early retirement or should you leave the scheme for any reason.

For more information, please refer to the USS member guide - Your guide to Universities Superannuation Scheme.

For information on USS Money Purchase AVCs administered by Prudential, please refer to the Maximising your pension section.

If you are paying AVCs as a former member of the Career Revalued benefits scheme, either as a one-off lump sum payment, or through regular instalments, any annual pension which you have completed the purchase of before 31 March 2016 will be included in the calculation of the benefits you have built up as at 31 March 2016, and then increased in line with the increases in official pensions.

If you are paying into a regular instalment AVC that started before 31 March 2016, we will assume that you will continue to make payments to complete the purchase of your additional annual pension unless you tell us otherwise.

Transfers

Some members may still be able to transfer benefits to USS from public sector pension schemes that are part of the ‘Public Sector Transfer Club’ arrangements. Such transfers will continue to buy additional years and days of service in USS on a final salary basis. However, benefits will be based on a pensionable salary calculated at 31 March 2016, plus pension increases up to retirement.

In order to transfer pension benefits to USS under the rules of the Public Sector Transfer Club you must request a transfer within two years of joining or re-joining USS. This option only applies if you joined USS between 1 April 2014 and 31 March 2016.

timerOn 1 October 2016 the treatment of transfers is changing


Up to 30 September 2016

All members will move into the USS Retirement Income Builder from 1 April 2016 and therefore any benefits transferred to USS before 1 October 2016 will be on a CRB basis forming extra pension and cash within that section of the scheme.


From 1 October 2016


If you want to transfer benefits (with the exception of some Public Sector transfers) from 1 October 2016 these transfers will only be accepted in to the USS Investment Builder. Transfers in to the USS Investment Builder will not benefit from the employer subsidy of investment management costs unless the transfer is from the existing Money Purchase AVC arrangement administered by Prudential. At retirement the fund can then be:

  • - a lump sum, which may be tax free whole or in part; or
  • - a regular monthly income.
Please use the ‘Transfer request form’ if you'd like to enquire about transferring funds to USS. Or speak to the USS pensions contact at your employer.