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Getting the most from your USS pension

USS provides hybrid benefits - it has defined benefit (DB) and defined contribution (DC) parts

How your pension works

You’re in the Retirement Income Builder, the DB part. Everyone joins this part when they become a member of USS. Here, you build up benefits based on your salary up to the salary threshold, and it gives you a guaranteed income for life when you retire.

You can also build savings in the Investment Builder, the DC part of USS, to boost your Retirement Income Builder pension or to support any other plans you have for the future. You can do this by making additional contributions or by transferring any other pensions you might have in other registered or recognised overseas pension schemes in to USS. If you start earning over the salary threshold you’ll also start contributing automatically to the Investment Builder.

What the Investment Builder means to a USS member
I'm a big fan. The tax relief is phenomenal. Because I do it under salary sacrifice, I’m getting 32% tax relief, so for every £1,000 I put in, it effectively only costs me £600, so I actually make a fairly large additional contribution every month because it's a no brainer.
Michael, lecturer at Ulster University

Check out some ways the Investment Builder could work alongside your Retirement Income Builder pension.

  1. Investment Builder savings could supplement your retirement income or you could use it for something else as you can access the Investment Builder as early as 55*.

  2. Like the Retirement Income Builder, Investment Builder contributions benefit from tax relief and if your employer offers it, salary sacrifice, so you’ll save on your National Insurance contributions too. There isn’t the option for USS employers to make salary sacrifice contributions to other savings vehicles or private pensions.

  3. USS members don’t pay investment or management fees on funds resulting from normal/additional contributions to the Investment Builder as these are covered by the scheme subsidy. Members of DC schemes in the UK , on average, pay a 1.09%** annual management fee for DC pensions.

  4. The Investment Builder’s one of few DC pensions that has access to Private Market investments and one of the few that offers an ethical option that automatically manages your investment risk as you approach retirement.

  5. You can be as involved as you want to be, choosing to manage your own fund choices, or you can leave it to us to do it for you.

  6. Get the most out of your tax-free lump sum – if you take your Investment Builder pot at the same time as your Retirement Income Builder pension, tax allowances are based on your overall USS benefits. This means you may be able to take up to 100% of your Investment Builder as a tax-free lump sum at retirement, without reducing your annual pension.

  7. You could pay less in charges***. If you have defined contribution pension savings in other registered or recognised overseas pension schemes elsewhere, transferring them to the Investment Builder could save you money. The only thing you pay for is the annual investment management charges, which range from 0.1%-0.3%, depending on what funds you invest in. It’s worth looking at what fees you’re paying in any other pension schemes in which you have savings and seeing how they compare. You should think about getting guidance or financial advice before transferring pensions or making any other decisions in relation to your retirement benefits.

To make additional contributions to the Investment Builder visit My USS. If you’re thinking about transferring benefits in to USS visit the transferring in page.

*Rising to 57 in 2028.

**According to pension adviser Profile Pensions. In 2015, the government set a cap of 0.75% for the annual charge on the default investment choices for defined contribution workplace pensions used for automatic enrolment. However, this doesn’t apply to other investment options or older schemes.

***The Times money mentor

Published: 28 June 2022

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