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Get under the hood of your pension

There are two parts to your USS pension, the Retirement Income Builder (the defined benefit – DB – part) and the defined contribution (DC) part, the Investment Builder.

Understanding your pension. Here’s a quick summary of what they give you and the benefits you get.

A guaranteed income for life when you retire – The Retirement Income Builder (DB).

When you started contributing to USS, you automatically joined the Retirement Income Builder – the DB part of USS – which gives you a guaranteed income for life and a tax-free lump sum up to HMRC limits when you retire.

According to the Pension Regulator’s (TPR’s) Occupational defined benefit (DB) landscape in the UK 2023 report, there are only 199 DB workplace schemes open to new members, compared to 25,800 DC workplace pensions, as reported in TPR’s Occupational defined contribution landscape in the UK 2023 report. This means your USS pension and the guaranteed benefits it gives you are rare.

Every year you build a block of pension based on an accrual rate (1/75 of your salary, up to the salary threshold). The pension you build up is banked and increased in line with inflation (subject to certain caps), giving you an element of inflation protection.

The Retirement Income Builder can stay with you throughout your career in higher education. If you change jobs to another USS eligible employer, you can continue building your USS pension, instead of having to start building in a new scheme, like many pension scheme members who move jobs. The benefits you build up in your new role will be linked to the ones you’ve built up already.

You can estimate what you might get in retirement by logging into My USS and using the Benefit Calculator.

Life and ill health cover

As long as you’re paying in to USS, you get life cover to help take care of your loved ones once you’re gone. They may be able to get a lump sum of three times your salary and a pension too.

If you have to stop working because of ill health which stops you from working or reduces your capacity to work, as long as you’ve been building your pension with us for at least two years, you could retire early with full USS benefits.

The Investment Builder (DC)

USS is a hybrid scheme, which means we also have a defined contribution (DC) part, the Investment Builder. You’re part of this because you’ve either transferred a pension to USS, are making additional contributions or earn or have earned above the salary threshold.

The value of your pot in the Investment Builder is based on what you and your employer have put in and the investment returns you get. If you haven’t already, it’s worth logging in to My USS to do a quick check on this savings pot:

  1. Check your money is invested were you want it to be. You can choose to manage investments yourself or decide to let us do it for you. We automatically invest in the Do It For Me option, if you don’t make a choice.
  2. Check your Target Retirement Age (TRA) is right for you. Your TRA is important if you’re in the Do It For Me option, we use this to determine when to start moving your investments to lower risk funds as you get closer to retirement.
  3. Review your contributions to the Investment Builder. If you were previously earning above the salary threshold before the changes on 1 April 2024 but no longer are, the contributions you make to the Investment Builder will have changed or stopped.

When you want to use your Investment Builder pot, which you can do from the normal minimum pension age (55 rising to 57 in 2028 for some members), you have a range of options to suit you, from cash payments to converting to a guaranteed pension income if you transfer to another arrangement. For more information on your USS pension and the Investment Builder:

  1. Visit your pension explained
  2. Check out our free webinars or watch a recording of a previous session – topics include about USS and understanding DC.
  3. Register or log in to My USS to use our calculators and tools.

Published: 25 June 2024