USS - Universities Superannuation Scheme
Please note: for recent changes and updates, please visit Changes to the USS pension scheme.
USS is a national scheme open to all staff in academic or comparable posts and is available in most pre-1992 Universities and a number of other educational and research bodies. The following grades are eligible for USS under the Terms & Conditions operated by the College.
- Academic and Research Family (All)
- Professional Services Family (Level 4 and above)
- Technical Services Family (Level 4 and above)
- Operational Services Family (Level 4 and above)
The USS scheme
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 £57,216.50 pa and Defined Contribution benefits on salaries above this threshold at a cost of 8% of salary. The USS is one of the largest private pension schemes in the UK that currently still allows new Defined Benefits to be built up.
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.
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.
Retirement Income Builder
This is the Defined Benefit section of USS. In this section you will build up a pension based on 1/75 of your earnings each year, up to a threshold, currently £57,216.50 pa, or £4,769 per month. You also build up a tax-free lump sum of 3/75 of your earnings up to the same limit.
At the end of each year the pension you have earned is added to any previous pension earned in earlier years. It is then increased in line with the growth in the Consumer Price Index (CPI), up to a maximum of 10%.
This is the Defined Contribution section of USS. If you earn over the salary threshold of £57,216.50 pa you will automatically join this section as well as the Income Builder section above. Contributions in excess of the threshold go into the investment fund. 8% of your contributions above the threshold and 12% of employer contributions above the threshold are invested each month you are paid. You choose where your contributions are invested by making your choices in My USS.
You can also choose to pay more into your Investment Builder account. If you elect to pay 1% extra this will also be matched by the College. You may also wish to consider transferring any pension you have earned before joining USS into your Investment Builder account.
You have flexibility in drawing from this fund at retirement and can either: -
- Take your savings as cash;
- Secure a regular income;
- Leave your savings invested and make withdrawals when you need to;
- Or a combination of any of the three options above.
Other Benefits in Both Sections
- Immediate life cover – a lump sum of three times your full pensionable salary together with a pension for your dependants should you die before retirement whilst in employment.
- An inflation-proofed pension – regular income, plus a tax-free lump sum, when you retire.
- Long-term illness cover (after two years' membership in aggregate) – an inflation-proofed pension for life, and a tax-free lump sum if you can't go on working because of long-term illness.
- Job move simplicity – moving from one USS member institution to another is straight forward.
If you have any queries, please contact the College Pensions team at firstname.lastname@example.org.