USS 2024 drop-ins
USS Pension drop in slides
You can access the slides presented during the USS pension drop in sessions.
Two USS Pensions drop ins were recently hosted (March and February 2024) by Carey Southward, Head of Pensions & Benefits.
The drop-in covered:
- Different types of pensions
- How USS works as a hybrid pension scheme
- How pension accumulates
- An update on changes to the USS pension scheme in 2024
The slides can be found in the green highlight box (to the right).
We had many insightful questions and didn't have time to answer them all - these have been compiled in a FAQs section below.
Pensions drop-in
The presentation section of the drop-in session, led by Carey Southward, was recorded.
Queries on USS update
Why is the USS employer contribution being reduced?
The cost of providing pensions has reduced, therefore, the overall contribution has reduced to 20.6%. Both member and employer contributions have reduced.
What are the changes to early retirement reductions? And how do these affect both the pre-2016 and post-2016 schemes?
The factors have been reviewed as part of the 2023 actuarial valuation and the early retirement factors will increase from April 2024. These apply to any pension that is drawn before the normal pension age, regardless of when the pension was earned.
Is the higher salary threshold more beneficial or a detriment?
The higher salary threshold means that from April 2024, all members will build up a larger amount of defined benefit pension income. However, less contributions will be credited to the Investment Builder (defined contribution) section of the scheme.
Seeing a breakdown
Where can I see a breakdown of all contributions to date in DB and DC, and the results of investments and broker fees?
You will be able to access all of your Investment Builder contributions and the investment breakdown in your My USS account. There are no broker fees and the management charges are covered by the employer for active members, excluding funds transferred in. Your Annual Statement will show the level of Defined Benefit pension built up. This is not based on the contributions paid in, but on your salary, and the length of membership.
What is the maximum percentage that Imperial can contribute for both the defined benefit and defined contribution?
Imperial pays 14.5% on all of your pay to USS, as part of the employer contribution. This can be seen in the bottom right hand side of the monthly payslip under the ‘balance’ heading.
How often can I get a "quote" from USS as to what my pension would be if I retired?
USS will provide a maximum of two retirement estimates per year but no more than seven months in advance of your retirement date. Earlier than that the retirement calculator will provide a reasonable estimate.
Additional contributions
Will Imperial add to any contribution that members may chose to make to the Defined Contribution investment?
The maximum contribution Imperial will make is the 14.% employer contribution.
Is there the option to make Additional Voluntary Contributions?
All USS members have the option to make Additional Voluntary Contributions (AVCs) to the Investment Builder section of the scheme at 1% of pensionable salary, or more.
Can I choose to contribute the same amount towards my pension as I was before 1st January?
You can pay Additional Voluntary Contributions (AVC's) by logging into your My USS account here.
I am still making AVC payments into the DB scheme (from when this was an option). Does the 2023 valuation affect these in any way?
No, the valuation has not changed the old style added year AVC’s and these were stopped for new members from 2016.
Queries on lifetime and annual allowances
Will the £10K annual allowance be triggered if you take Defined Benefit pension? Or only if you draw from the Defined Contribution pot?
Only if you take a taxed lump sum from a DC pension pot. More information can be found here.
Has the £40k annual allowance increased?
It increased to £60,000 from the 2023/24 tax year.
Has the Lifetime Allowance (LTA) been abolished?
The Lifetime Allowance (LTA) will be abolished in April 2024. In April 2023, the budget changes meant that no LTA recovery charge applied for pension pots that exceeded the LTA in place at the time of £1.073m.
Can I avoid paying tax above the LTA threshold, if I convert any lump sum above this threshold into my annual pension?
Pension payments are taxable as they are income. These payments will be taxed at source by USS.
Reaching pension age and retirement
Are the Defined Benefits and Defined Contributions in addition to the state pension, or do they replace the state pension?
As long as you have paid your National Insurance Contributions for long enough, you will also receive a state pension in addition. You can check your state pension entitlement here.
Does the flexibility of the Defined Contribution pension also include taking it earlier than the Defined Benefit pension?
Yes, you can draw from this fund once you have reached minimum pension age, which is currently 55. More information can be found here.
Where is the latest information on Imperial's regulations for working after retirement?
Please visit our pages on Approaching Retirement and Retirement Options for further information.
In the event of death
What happens to the Defined Benefit pension in the event of death?
When you join USS, you will automatically qualify for life cover equal to three times your salary, so long as you remain an active member paying into USS. In the event of your death, this is paid tax-free to your beneficiaries as nominated by you. You can check your ‘My USS’ account for further information directly related to you and your pension.
Further information on what happens if you die after leaving can be found here.
Is there a difference in what a beneficiary would receive upon a staff members death between Defined Benefit and Defined Contribution?
The lump sum payment on death is three times annual salary at the time of death. This is based on the whole annual salary, regardless of the threshold.
Will 50% of my TOTAL contributions in the Defined Benefit (DB) pot and Investment Builder be passed onto a spouse and child in the event of death?
In retirement you receive a pension from the USS Income Builder portion only. The USS Investment Builder cannot be used to provide a pension within USS. After death 50% of your USS Income Builder pension passes to a spouse or civil partner. More information can be found here.
Other queries/miscellaneous
Is the Defined Benefit salary threshold pro rata for part time staff?
No, the threshold operates on your actual salary (whether someone is full time or part time). The threshold is currently £41,004.
Are there any benefits in transferring USS into Defined Contribution investments held with other pension providers?
This is personal choice for someone to consider, and seeking financial advice is recommended.
How does Salary Sacrifice work within the USS scheme?
All salary sacrifice schemes are tax efficient schemes where you can exchange salary in return for a benefit. In the case of PensionSMART you exchange salary in return for Imperial paying the employee contributions, in addition to the employer contribution. The benefits of this is that as you receive a lower salary you pay less National Insurance Contributions (NIC’s). Imperial also pay lower employer NIC’s.
What are the disadvantages of PensionSMART?
If you pay using PensionSmart which is salary sacrifice you would not be able to have a refund of your own contributions should you leave before two years membership. If you do not contribute through salary sacrifice you can have a refund if you leave before two years.
In the case of postdocs hired on short term contracts - can they get the money back that was salary sacrificed, if leaving the country?
No, they have received a lower salary, however, they have a pension in USS. If the method of contributing is not salary sacrifice, then a refund of contributions can only be paid if the membership is under two years.
What is the tax implication when transferring the pension to another country?
This will depend on the tax amounts set locally within the country in question.
Can international employees on short contracts claim back contributions after leaving Imperial? If I leave the country, will I still get my pension?
Please see information here on your options after leaving.