The USS is a hybrid scheme, meaning that it is partly a Defined Benefit scheme and partly a Defined Contribution scheme. Members currently earn a Defined Benefit pension on salary up to £70,296 pa and Defined Contribution benefits on salaries above this threshold at a cost of 6.1% of salary to members and 14.5% for employers. The USS is one of the largest private pension schemes in the UK that currently still allows new Defined Benefits to be built up.
Defined Benefit Scheme
- In a Defined Benefit Scheme, the employer agrees to provide a specified, fixed, annual pension payment and/or lump sum at retirement, which is calculated through a formula based on a member’s salary and length of service. The amount usually increases with inflation and is guaranteed until death.
Defined Contribution Scheme
- In a Defined Contribution scheme, members have individual saving pots that both they and their employer pay into. At retirement, members draw their pension savings from this fund, which consists of all the employer and employee contributions paid in over the years, plus investment returns that have been earned by investing the scheme in, for example, stocks and shares. In this kind of scheme, employees can choose whether they wish to take out all their retirement savings as a lump sum, or to opt for alternative options such as an annuity or drawdown. An annuity is a fixed sum of money paid to someone each year, typically for the rest of his or her life. The annuity option provides a guaranteed regular retirement income from your individual saving pot. Drawdown involves keeping your individual saving pot invested but regularly drawing an income from it rather than purchasing an annuity.
Opting Out
If you are in the job family, Level 4 and above and are contributing to USS pension scheme and wish to opt out, please complete the opt out form and return it to pensions@imperial.ac.uk
You can refer to your contract of employment to check which scheme you are registered in or will be auto-enrolled into. NOTE: You cannot opt out of a pension scheme before your start date, or, if you are a casual worker until you have been auto-enrolled into a pension scheme.
- Notice to opt out or withdraw from USS form - USS Opt Out Form
For direct updates on the changes, please visit Imperial's update page and USS's website.