From 1 April 2024, you’ll build up benefits differently:
A higher accrual rate for your defined benefit pension
The rate at which you build defined benefits in the Retirement Income Builder will increase.
Currently you get 1/85 of salary (up to the salary threshold) in defined benefit pension each year and 3/85 of salary as a lump sum on retirement. This will increase to 1/75 of salary for pension benefits and 3/75 of salary for the lump sum respectively (for salary up to the salary threshold).
Salary threshold increase
The salary threshold is anticipated to be £70,308 (this will be confirmed in the next few weeks). This means if your salary is higher than the current salary threshold (£41,004), you’ll start building up a greater proportion of defined benefits in the Retirement Income Builder and less savings in the Investment Builder, the defined contribution part of USS. If your salary is below the current salary threshold, the increase to the salary threshold will not impact your benefits.
The salary threshold will be increased annually until 31 March 2028 in line with increases to official pensions, which broadly go up with CPI inflation, subject to certain limits. It is proposed that the limit would be changed from 2.5% to a maximum of 10% (subject to certain criteria, as described in the pension increases section below).
Higher cap for future pension increases
The defined benefits that you have built up since 1 April 2022 in the Retirement Income Builder would increase every year both before and after you retire in line with increases to official pensions, which currently go up with CPI inflation. They will be subject to a higher maximum increase of 10% rather than the current maximum of 2.5% (which had been deferred to 1 April 2026 but applying to benefits built up from 1 April 2022). Increases will be as follows:
- Where inflation (currently CPI) is 5% or less, the increase will be matched.
- Where inflation is more than 5% but less than 15%, the increase will be 5% plus half of the percentage increase over 5%.
- Where inflation is 15% or more, the increase applied will be 10%.