Just the ticket

Presentation for USS membersColin Busby and Eifion Morris APMI

Is my pension safe?

• Extreme volatility of financial markets has an effect on USS investments

• USS is a long-term investor• Positive cashflow• Strong employer covenant• Last man standing• Joint Review Group formed by employers and UCU 'to

determine what changes should be made to ensure USS remains an attractive and affordable defined benefit pension scheme'.

• Pension Protection Fund

The basics

The journey

Life events

Improve your benefits

Your questions

The basics

1

80th

= x Pensionable Salary x Years of membership

12.5

25

37.5

50

62.5

0

10

20

30

40

50

60

70

10 years 20 years 30 years 40 years 50 years

Years in USS

Full-time pension calculation

% ofsalary

Part-time calculation

100% 30% 50%100%

Years

10

20

30

40

10

20

30

40

Salary £000

• Total service: 10 + 3 + 10 + 5 = 28 years

• Total pension: 1/80 x full-time salary x 28

Benefit modeller

• Vary the cash– No cash and higher pension

– Higher cash and lower pension

• Maximum 25% of capital value

– Multiply your pension by 20

– Add on tax-free cash

– Rough guide: 5.75 x ‘standard’ pension

Varying your pension & cash

• E.g. using factor of 15.24 (male aged 65): – £1 pension gives extra £15.24 cash, or– £15.24 of cash would provide extra £1 pension

Cash conversion factors

Male

65 = 15.24

60 = 17.86

55 = 20.33

Female

65 = 16.89

60 = 19.34

55 = 21.69

Benefit conversion modeller

Retirement options

• Early retirement between 50 & 60 due to redundancy or at request of employer – pension not reduced for longer payment – based on service at that date unless

compensation available• Employer pays ‘funding charge’• From age 60 in accordance with contract or with

employer’s consent • Minimum retirement age 55 from 6 April 2010• Incapacity retirement

– total incapacity or partial incapacity benefits– more information in Factsheet 10

Pension increases

Pension Increase History

0

5

10

15

20

25

30

1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005

Year

% In

crea

se RPI

USS Increase

0

5

10

15

20

25

30

1975 1980 1985 1990 1995 2000 2005

Year

% In

crea

se RPI

USS Increase

Pension increase history

Things to do sooner, not later

Update your beneficiary details• Life assurance of 3 x salary• Income protection for those closest to you

– spouse/dependant/civil partner– children

• MO1 – for lump sum death benefits (3 x salary)• MO3 – register a dependant (dependant’s

pension)Investigate a transfer to USS• MO16 – transfer request form

– (two year time limit on transfers from the Public Sector)

Consider if you’re saving enough towards retirement

Pension not enough?

Thinking of retiring early?

Two USS options for increasing your benefits

1. Added years AVC and/or

2. Money Purchase AVC (Prudential)

Tax relief on both options

All extra payments must go through payroll

Other savings/investments available

Increasing your benefits

Added years AVCs

• Final salary benefit

• Secures extra years and days USS service

• Final benefits dependent on pensionable salary at retirement and service purchased

• Maximum additional 15% of salary contribution to added years

• Changes to payment amount requires new contract

Added years modeller

Money Purchase AVC facility - Prudential

• Retirement benefits dependent on

– amount invested

– investment choice/performance

– cost to buy retirement benefits at retirement

• Contributions up to 100% of gross taxable pay

• Tax-free cash (25% of fund and possibly 100% at retirement)

• Fund can be used at retirement to buy years and days service from USS

• Flexible contributions

Additional Voluntary Contributions

• AVCs are not the only way to save for retirement

• AVC funds cannot be accessed before retirement

• USS cannot advise you which option to choose

More information

• Pensions TV– Joining– Leaving– AVCs– Overseas– Transfers-in– Maternity leave– Absence

• Website - www.uss.co.uk• Member guides• Service statements

Contacts

• Pensions office contacts

• USS website – www.uss.co.uk

– Slides available here

– List of financial advisers under ‘Planning’ section

• Prudential

– Website www.pru.co.uk/universitiesavc

– Helpline 0800 515 914

Every effort has been made to present accurate information and members are advised to check with their employer and/or the USS guides to re-affirm their understanding before acting on any information given.