A person who has joined the scheme and is currently paying contributions and building up benefits under the scheme.
This includes people who are paying special contributions as, for example, they have made a special election under the rules. It also includes people who are not currently paying contributions but remain ‘active’ within the scheme, for example during a period of authorised absence such as unpaid maternity/paternity leave.
Deferred and pensioner members are generally not active members (there are limited cases where a person may have benefits in USS under more than one category).
A reduction made to the benefits a member has built up in the scheme in order to reflect any additional cost arising from the payment of those benefits eg. as a result of retiring earlier than normal pension age.
A formal assessment of the scheme's assets and liabilities, which must take place at least every three years. The valuation is carried out by the scheme's actuary, using various assumptions decided upon by the trustee, with input from its advisors, for example assumptions about future investment returns, salary increases and mortality.
A professional skilled in evaluating and assessing pensions and related risks, particularly long-term demographic and financial risks.
This is the amount you will pay tax on if the pension benefits you build up in a tax year exceeds a certain value. This value is currently £40,000 but could be lower, depending on your income. There is further information on our Tax considerations page
An insurance policy you can buy upon retirement using your defined contribution pension, which pays a guaranteed income for life. The rate received will depend on a number of factors including the amount of money in your defined contribution pension, market conditions, the age and health of the applicant, whether or not the pension will increase once in payment (eg in line with inflation), and whether a survivor's pension will be provided upon your death.
In the context of the scheme these are the different types of investments held within the fund and purchased using the contributions made to the scheme. The assets may include company shares, UK government bonds, property, infrastructure and cash. The assets, and earnings on those assets, are used to pay the benefits provided by the pension scheme.
Employers are required, under specific regulations, to automatically enrol "eligible jobholders" into a qualifying pension scheme and make contributions towards it. A jobholder who has been automatically enrolled is free to opt out and receive a refund of the contributions they have paid, if they do so within a period.
Contributions over and above a member's normal contributions if any, which the member elects to pay to an occupational pension scheme in order to secure additional benefits.
Career Revalued Benefits (CRB)
A type of defined benefit pension where benefits are based on salary over the whole period of membership, with each year's accrual revalued in line with an index (sometimes linked to inflation).
This refers to any money you take out of your pension as a lump sum upon retirement. You are entitled to three times the value of your pension as a lump sum from the career revalued benefit section. You can also access cash from your defined contribution pension. How much cash you choose to take and how you access it will depend upon your individual circumstances. You can take up to 25% of your total pension saving tax free, anything you take above that may be taxed at your highest rate.
consumer prices index (CPI)
The Consumer Prices Index (CPI) is an official measure of inflation used in the UK and is published monthly by the Office of National Statistics.
Contracting-out relates to the government's provision of the State Second Pension, which is effectively a top-up to the basic state pension. If an employer offers the facility, members can choose to opt-out of paying this top-up and instead choose to pay those contributions into a workplace scheme such as USS. This is known as 'contracting out' and is a tax-efficient way to save into a person's own individual pension rather than relying upon the government's State Second Pension. Government reforms to introduce a single-tier state pension will mean the State Second Pension will be abolished (and with it the option to contract out) with effect from 6 April 2016; this is a government change and will mean increased national insurance contributions for both employers and employees from April 2016.
contractual pension age
A contractual pension age is a term or condition of employment which confers a right to retire from an age which is earlier than would otherwise be the case under the scheme rules.
It is now a historic (prior to October 2011) provision contained within the USS rules which refers to the existence of such terms and conditions in contracts of employment held by a proportion of USS active members.
USS has previously asked institutions to specify whether a member had a contractual pension age that is earlier than age 65 and - to the extent that it is still relevant - this information is displayed on the service statements issued by USS on an annual basis.
The benefits awarded to a member of a defined benefit scheme who has left service and has not yet become eligible for payment of, or has not elected to draw, benefits.
A person who was previously an active member of the scheme and who has completed a period of pensionable service which qualifies them for deferred benefits.
Additional contribution to the fund to meet any funding deficit over the relevant recovery period.
Defined Contribution (DC)
This a type of pension saving known as defined contribution in which the amount of benefits provided is based upon the amount contributed (by both employer and employee), how those contributions are invested and how those investments perform. Government reforms have increased your options for withdrawing money from defined contribution facilities providing you with more flexibility as you approach retirement.
Someone who the trustee considers was financially dependent on you at the time of your death. This could be a partner, or another person with a financial dependency on you.
The extent to which the employers are able to meet the funding requirements of the scheme both in the short and long term. The Pensions Regulator refers to it as the "extent of the employer's legal obligation and financial ability to support their defined benefit scheme now and in the future."
A type of defined benefit pension where the benefits received are related to members' pensionable salary when leaving the scheme or retiring, and the length of pensionable service.
A concept which enables active members to draw a proportion of their accrued benefits, whilst continuing to work fewer hours, and continuing to accrue future pension benefits. Employer consent is required in order to access the flexible retirement arrangements.
The amount by which the fund’s assets fall short of the amount required to provide for the scheme benefits.
hybrid pension scheme
A pension scheme which offers a combination of defined benefit and defined contribution benefits.
The date at which the changes to the scheme are to be implemented. The changes are being phased in on the 1 April (Defined Benefit) and the 1 October (Defined Contribution).
Subject to having two years' USS membership in aggregate, the scheme will pay you retirement benefits, which have not been actuarially reduced for early payment, from any age if you are suffering from an illness or condition that prevents you from working or reduces your capacity to work.
This allows you to draw an income from your retirement benefits whilst leaving the balance invested. This option is only available in the defined contribution section.
Investment risk is the extent to which the anticipated returns from a particular asset do not materialise. The level of risk is different for each different type of investment - generally higher risk investments offer the highest potential returns, but also a greater possibility of achieving lower than anticipated returns.
In relation to the defined contribution, members will be able, if they so wish, to choose from a range of investment funds provided by the trustee - and therefore choose the level of investment risk they are willing to accept.
Joint Negotiating Committee (JNC)
A committee which is formed under the rules of USS, and is responsible for decisions regarding changes to the terms of the scheme. The JNC is made up of five representatives of the employers (nominated by Universities UK), five representatives of the members (nominated by the University and College Union), and an independent chairman.
In the context of the scheme, the liabilities are the amount of pension benefits which have been earned by members in the scheme to date, and which are due from the scheme both now and in the future. The value of the pensions and other benefits payable in the future cannot be precisely calculated, for example it is not known how long a pensioner will live to draw a pension, and the value of the liabilities is therefore based on assumptions decided by the trustee based on the scheme actuary's advice.
This is the amount you will pay tax on if your pension pots exceed a certain value. This value is currently £1 million.
You can make additional contributions into the defined contribution section, any additional amount will be based on your total salary above and below the salary threshold. If you choose to pay an additional contribution, employers will match the first 1%.
All members can choose to pay more than the additional 1% contribution into a defined contribution pension, however employers will only match 1% of your contribution.
Normal Pension Age (NPA)
NPA is the earliest age from which a member has the right to draw benefits from the scheme without actuarial reduction (in the absence of special circumstances, such as ill-health).
There are different NPAs in the scheme, depending on the dates from which pensionable service has been earned by members. The NPA will increase in the future in line with the state pension age. For further information see Gov.uk
pension protection fund (PPF)
A fund set up by the Government to provide benefits to members of defined benefit schemes whose sponsoring employers become insolvent and where such pension schemes have insufficient assets to pay the pension benefits owed.
This is your highest average salary worked out to a formula designed to give you the best possible calculation. This approach – “smoothes out” any adverse ups and downs in your salary over the years, and allows adjustments to be made for price inflation.
private sector pension scheme
An occupational pension scheme which is registered as a pension scheme with HM Revenue and Customs, and which is not a public service pension scheme.
A person who is in a description or category of employment which entitles that person to membership of the scheme, but that membership has not been taken up (and therefore the prospective member is not a member of the scheme).
protected pension age
Special retirement terms for people who were members of the scheme on 5 April 2006, and had five or more years’ pensionable service, and whose USS eligible employment is terminated when he/she is aged 50 or over, by reason of redundancy.
See definition of Money purchase AVCs.
public service pension scheme
Occupational pension schemes for employees of central or local government, a nationalised industry or other statutory body (they are statutorily defined). Public service pension schemes include the Local Government Pension Scheme (LGPS), the Teachers’ Pension Scheme (TPS), the Principal Civil Service Pension Scheme (PCSPS) and the National Health Service Pension Scheme (NHSPS).
the pensions regulator (tPR)
An independent body responsible for the regulation of work-based pension schemes in the UK with key objectives of protecting the interests of scheme members, the promotion of good administration and reducing the risk of claims on the Pension Protection Fund.
A retired member is a member who is retired.
This is when you retire at the scheme’s normal pension age. The NPA is currently 65, however it will increase in line with increases to state pension ages for men and women. If/when the NPA increases in future, the higher NPA will only apply to benefits built up after any change.
Where a member has entered into a salary sacrifice arrangement under which the employer has agreed to pay additional contributions to the scheme, the member shall not be required to pay any contributions to the scheme, save for AVCs. The employer shall pay additional contributions to the scheme equal to the amounts of those contributions which the member would have been liable to pay. The employer shall in addition pay such further amounts to the scheme as are required under a supplementary deed of accession.
Members will build benefits in the career revalued benefit section on salary up to and including the salary threshold. Members earning salary above the salary threshold will accrue benefits on salary in excess of the salary threshold in the defined contribution section.
The salary threshold will be set at £55,000 at 1 April 2016 and will be increased each year in line with increases in official pensions (currently CPI, subject to certain limits) until a review has been completed by the JNC, which shall take place no later than 31 March 2020.
The trustee company is required to obtain a full actuarial valuation of the scheme’s assets and liabilities at least every three years. The valuation must include the actuary’s estimate of the scheme’s solvency and the contributions that will be required to fund the scheme in the future.
state pension age
This is the earliest age from which you can take your state pension, and depends upon your date of birth. On the current timetable - as set out in the Pensions Act 2014 - the state pension age is due to rise to 66 by 2020 and to 67 between 2026 and 2028. The Government has also committed to reviewing the state pension age every five years.
A representative organisation for the UK’s universities supporting the work of universities and promoting their interests.
university and college union (UCU)
A trade union and professional association for academics, lecturers, trainers, researchers and academic-related staff working in further and higher education throughout the UK.