You must apply and your employer must submit your completed form before 3 March as your VSC will start from this date. Use our Benefit Calculator in My USS to see how setting a lower salary will impact your estimated retirement savings.
Pension tax changes
The government has announced changes to pension tax allowances and charges, which may affect tax management measures that you’ve put in place or your savings decisions. Find out more in our pension tax update.
What is the Voluntary Salary Cap?
If you’re getting close to your Annual Allowance (AA) limit and you earn over the salary threshold, you could use a Voluntary Salary Cap (VSC) to help manage the amount of tax you pay on the benefits you build up and on your salary. But if you use VSC, you’ll build fewer USS benefits.
How does it work?
If you’re a USS member paying in and earning over the salary threshold, you can set your VSC anywhere between the salary threshold and your pensionable salary.
You’ll pay the same contribution rate but neither you nor your employer will pay contributions above your VSC to your Investment Builder pot. But if you still want your life cover and ill health benefits to be based on your full salary, you can currently pay 2.5% of your salary above your VSC. Otherwise these benefits will be based on your VSC.
Setting a higher VSC will use up more of your Annual Allowance – but you’ll also build up a bigger Investment Builder pot.
It could be appropriate for you to set your VSC above the salary threshold. We recommend that you get financial advice to decide what VSC is right for your personal circumstances.
Applying for VSC
You’ll need to speak to your employer before 3 March because they’ll have to change their payroll.
You must apply and your employer must submit your completed form before 1 April as your VSC will start from this date. If you miss the deadline or join USS after 1 April, the earliest we can apply your VSC is the following April.
Need a hand?
To find out how different VSCs could affect you, give our Contributions & Tax Calculator a go.
Sign up for a free Focus on Pension Tax webinar to learn more about pension tax, including USS specific tax mitigation options.
If you want to seek guidance or take financial advice on the options available to you, visit the guidance and financial advice page. You’ll find a range of resources to support your planning and you can also find information on how to access an independent financial adviser.