USS and the new state pension

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The Government introduced the new state pension from 6 April 2016 and this was combined with the end of the system of contracting-out of the state second pension. In response to these reforms and as required under the rules of the Scheme, USS will make some changes to how pension increases are applied and calculated to an element of USS pension called the Guaranteed Minimum Pension (GMP).

Importantly, the vast majority of members will not see any change to their pension increases as a result of this. However, some technical detail is provided below for information purposes only.

Members do not need to take any action in response to this, and the changes will happen automatically where they apply. Those members who may see a change to their GMP pension increases will be contacted in early 2017.

The changes may be relevant to you only if you have USS pensionable service between 6 April 1978 and 5 April 1997 (including any USS service credited following a transfer-in from another pension arrangement and/or a scheme merger) during which period members earned GMPs. Until recently, responsibility for applying increases to GMPs was split between the government and USS – a system explained in more detail in the retiring from the scheme guide.

The effect of the changes is that USS will be responsible for paying all of the increase on the GMPs earned by certain members:

Automatic changes

  • For USS members with service between 1978 and 1997 who attain State Pension Age (SPA) from 6 April 2016, USS will pay all pension increases on a member’s pension including the GMP element. The first increases under this new system will be provided in April 2017.

Continuation of current practice

  • USS members who attained SPA before 6 April 2016 (men aged 65 and women aged 63) will continue to have increases applied under the old state pension system whereby responsibility for applying the increase to the GMP is split between the government and USS.

In early 2017 USS will contact a small number of individual members who may see some changes to their GMP pension increases because they transferred pension benefits to USS as a result of a past scheme merger. Different rules may apply in these cases.

If you need any further information please contact USS.

USS is governed by a trust deed and rules and if there is any difference between this publication and the trust deed and rules the latter prevail. Members are advised to check with their employer contact for the latest information regarding the scheme, and any changes that may have occurred to its rules and benefits.

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