your uss journey every effort has been made to present accurate information. members are advised to...
TRANSCRIPT
Your USS Journey
Every effort has been made to present accurate information. Members are advised to check with their employer and/or the USS guides to confirm their understanding before acting on any information given. This presentation may be recorded for training and audit purposes.
Presentation for USS membersEifion Morris APMI
Agenda
1• How much will your pension be?
2• Getting more out of USS
3• Tax relief limits
4• Other benefits
5• What if you leave?
6• When can I stop working?
7• Questions?
How much will your pension be?
The basics
Pension
Tax-free cash
Standard package
The calculation
1/80th Service Salary Pension
Pension 3 Tax-free cash
Part-time calculation
100% 30% 50%100%
Years
10
20
30
40
10
20
30
40
Salary £000s
10 years 3 years 10 years 5 years
What will I get?
10 15 20 25 30 35 40 45
13% 19% 25% 31% 38% 44% 50% 56%
Years’ service
Pension as % of salary
If salary was £40,000 with 30 years service benefits:-
Pension of 30/80 X £40,000 = £15,000 pa
PLUSTax-free cash of 3 X Pension = £45,000
Full-time member
How big will your pension be?
Average service
32 years
X 1/80thAverage salary
£42,000 paAverage pension
£16,800 pa
Getting more out of USS
Put more in to get more out
Added years15% maximum £
Tax relief
Certainty
Tax-free cash
Long-term saving
Money purchaseUp to £50,000 pa
Tax relief
Flexibility
Tax-free cash
Long-term saving
Help from the tax man
• £100 from net pay
Pay
• £125
Invest • £125 (returns dependent on investment)
Retire
Help from the tax man
• £100 from net pay
Pay
Tax allowances
Annual Allowance
• £50,000 pa• £40,000 pa wef April 2014
Lifetime Allowance
• £1.5 million• £1.25 million wef April 2014
USS tax options
Added years modeller
Money Purchase AVC calculatorwww.pru.co.uk/uss
How to pay AVCs
Added Years
•Use modeller on www.uss.co.uk•Contact Pensions Office
Money Purchase
•Contact Prudential directly•Personal consultation•0800 2346913
Other benefits
Transfers in to USS
Transfer previous benefits to USS
• Two year time limit on transfers from the Public Sector
Beneficial Club transfers
Transfer request form – www.uss.co.uk
Benefits for your dependants
Life assurance of 3 x salary
• Spouse/dependant/civil partner• Children
Income protection
• Death benefit nomination form (3 x salary)• Registration of financial dependant form (dependant’s pension)
Update your beneficiary details
What if you leave?
Benefits on leaving
More than 2 years service?
Pension = Service/80 X final pensionable salary
Plus 3 X Pension as cash
Increases apply up to retirement
Less than 2 years service
Refund of your contributions (except salary sacrifice) less
tax and NI
Pension based on your contributions only
Options after leaving
Transfer out?
At any time
To any UK and many overseas schemes
Full value of benefits
Draw at retirement
Plus deferred pension increases
from leaving to retirement
Rejoin?
Final salary section if within 30 months and benefits left in
USS
Re-link earlier membership
When can you stop working?
Normal retirement
Retirement at the Normal Pension Age applicable
• No ‘early retirement’ reductions
NPA to increase in line with State Pension Ages
• 1 October 2020 66 • timetable to be announced for increase to State Pension Ages
Retirement before NPA will be classed as early retirement
• but only in respect of service after any increase
Future increases to NPA - 66
100% 65
100% 96% 65
October 2020 NPA increases to 66
Early retirement
Own choice •Reductions apply for each year earlier than Normal Pension Age
Employer consent from 60 •Pre October 2011 benefits in full•All benefits in full if 55 or more on 1 October 2011
Redundancy •Until 1 October 2014 no reductions apply
Severance •Benefits in full
Flexible retirement •Take some of your pension and keep working, reductions may apply
Incapacity retirement •Income if your ability to work is limited by ill-health
Flexible retirement
• Subject to consent of employer and USS• 2 months’ notice required by USS
Flexible retirement from age 55
• Hours must reduce by at least 20%• Draw up to 80% of benefits (minimum 20%)• Early retirement reductions apply before age 60
2 ‘Flexes’ possible, 3rd is full retirement
• If you flex, you continue to build up further benefits on a part-time basis and remaining benefits based on future full-time equivalent pensionable salary
You continue to build up benefits
Incapacity retirement
Pension based on service to 65
Total incapacit
y
Pension based on service already earned
Partial incapacit
y
Varying pension and cash
•No cash and higher pension•Higher cash and lower pensionVary the cash
•Multiply your pension by 20•Add on tax-free cash•Add on any Prudential AVCs
Maximum 25% of capital value
What next?
What next?
• Pensions office contacts• Prudential – www.pru.co.uk/uss
– 0800 234 6913
• USS website – www.uss.co.uk– Slides available here– Pensions TV
Your questions
Money Purchase AVC fund early exit charge
Year of withdrawal % of fund withdrawn
During Year 1 15%
During Year 2 10%
During Year 3 8%
During Year 4 6%
During Year 5 5%
During Year 6 onwards No charge
Pension increases
In line with ‘Official pensions’
• Civil Service, NHS, Teaching etc
Consumer Price Index used as measure of inflation
• Benefits earned before 1 October 2011 no cap• Benefits since 1 October 2011 cappedService before 1 October 2011 Since 1 October 2011
Matches official pensions with no cap Matches up to 5%
5% plus 50% of increases above 5%
Overall ceiling of 10% pa
Pensionable Salary
Calculated in most favourable way
• Best 12 months in last 36, or• Best average over 3 years falling in last
13 years
Based on last 13 years’ salary history
All salaries indexed by RPI
Better of:
Pensionable salary calculation
Retirement 40000 X
193.5/193.5 = 40000
2 38889 X193.5/188.6 = 39982
3 37612 X193.5/182.6 = 39857
4 36501 X193.5/177.9 = 39701
5 34914 X193.5/174.3 = 38760
6 33327 X193.5/171.6 = 37580
7 31740 X193.5/166.5 = 36887
8 30153 X193.5/164.5 = 35468
9 28566 X193.5/159.5 = 34655
10 36500 X193.5/153.8 = 45922
11 31740 X193.5/149.8 = 41000
12 28566 X193.5/145.2 = 38068
13 22218 X193.5/141.8 30318
Year Salary RPI increase
Revalued salary
= 41663
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