Your pension’s important – it could make a big difference to your life – but sometimes, it feels like you’re bombarded with warnings about planning and making the right choices and saving more, and more and more…
It’s no wonder you might block them out, especially since it all feels pretty complicated and – let’s be honest – future you can worry about that stuff: right?
Well, not really. But before you can even think about planning for your future, the most important thing is for you to know how your USS pension works.
Then, whether you’re new to USS or you’ve been building your pension for a while, you’ll find it easier to make the choices that are right for you.
How USS works
USS is a hybrid pension scheme. That means we offer you both defined benefit and defined contribution benefits.
All USS members have defined benefits.
You build them up in the Retirement Income Builder, which you join automatically, and they’re based on your contributions and the contributions your employer makes for you – the longer you’re a member, the more you build up.
The Retirement Income Builder gives you a guaranteed income for life, when you retire, and you can also choose to take a one-off tax-free lump sum up to a certain limit.
The amount of income and the size of the lump sum are up to you – you can dial up the income and reduce the lump sum or vice versa.
Defined benefit pensions are rare, these days.
According to The Pensions Regulator, of the 39,180 private occupational pension schemes in the UK, there are only 1,100 that provide defined benefits to new members – so USS is among less than 3% of schemes giving new members this type of guaranteed income for life, after you retire.
You’ll have defined contribution savings, if you’re in the Investment Builder.
So, if you’ve recently transferred benefits (even defined benefits) from another pension scheme into USS, you earn above the salary threshold and / or you make additional contributions, this will be you.
With defined contribution, we invest your savings into a range of funds, and the pot you build up is based on the amount you save and the returns on those investments
In the Investment Builder, you can leave it to us to manage your investments for you or you can choose from a range of funds to suit your aims and your ethical beliefs and manage your investments yourself in our member portal, My USS.
The Investment Builder could help you build up a pot to boost your guaranteed defined benefit pension – the best of both worlds.
And there’s a range of flexible ways you can take your Investment Builder pot from age 55 (rising to 57 in 2028) – you don’t even have to be retired.
What that means for you
Knowing the basics about how USS works lays the foundation for any pensions decisions you want to make now or in the future.
To start with, you know you have the security of a guaranteed income with the Retirement Income Builder, and with the Investment Builder, you can choose to top it up whenever you like by making additional contributions.
The longer you contribute to the Retirement Income Builder, the more guaranteed income you’ll get, and if you build up an Investment Builder pot, you’ll have a range of flexible ways to access those savings.
You get a bit more too
As well as a guaranteed income and the choice to top it up, being a USS member gives you a range of other benefits that could support you and your loved ones such as:
- Life cover
- Ill health benefits
- Tax relief
What's next
Check out the resources below to get a bit more information on any of the subjects covered here.
If you really want to get into thinking about your pension and start planning for your future, make yourself a cuppa and skim through the rest of our website.
You can even use the Benefit Illustrator to see what you could get in retirement, if you do want to start doing a bit of planning.
