Pension building in your 20s and 30s

Build for the future you want

You may have other priorities that will come around sooner than your retirement. However, it can be useful to think about the lifestyle you want in later life and make an early start on planning a way to achieve it.

The Pensions and Lifetime Savings Association (PLSA) has outlined retirement living standards based on three levels of income, which can give an idea of how much money might be enough for your goals. Find out more on our how much you’ll need page.

Whatever retirement might look like to you – be it opportunities to travel or paying the bills and having the occasional treat – building a pension can help make it happen. You may also be eligible to receive a State Pension, but this might not be enough on its own.

According to the PLSA’s retirement living standards, the minimum annual income you’d require to cover basic needs and have a little left for some extras exceeds the State Pension amount.

The earlier you start saving towards your retirement goals, the more you’ll be able to take control of your future. You’ll have more options and flexibility when it comes to the size of your retirement income and how and when you can retire.

Read about your options at different ages and stages to get an idea of the ways you could access your benefits and savings in the future.

The ways you can save

While you’re paying in to USS you’re automatically building benefits in the Retirement Income Builder – the defined benefit (DB) part. This will give you a guaranteed income for life in retirement, and a one-off tax-free (up to a certain limit) cash lump sum of three times your pension when you retire.

DB pensions like this part of USS are now quite rare. The benefits you build up in the Retirement Income Builder will also increase each year, before and after you retire. This provides a level of inflation protection for your benefits.

As USS is a hybrid pension scheme, you’ll also build up savings in the Investment Builder – the defined contribution (DC) part – if you:

• Earn above the salary threshold 
• Transfer in pensions from elsewhere
• Choose to make additional contributions at any point while you’re paying in to USS.

How your Investment Builder savings grow will all depend on how much you invest and how your investments perform. You can find out more about your investment options on our choosing your investments page.

It’s also possible that the money you put in earlier on could be worth more than the money you put in later. That’s because it has more time to grow.

You’re not alone as you pay in

With a workplace pension like USS, contributions from your employer make up a chunk of your pot too.

Subject to certain limits, you also benefit from tax relief on the contributions you pay in, with some of the money that would normally go to the government in tax going towards funding your pension instead. To estimate how much you’ll save in tax while you’re paying in to USS, log in to our online member portal, My USS, and use our Contributions & Tax Calculator.

For more information about tax implications as you build your pension, and when you come to take it, read our pension tax pages.