Important changes to the Investment Builder

What is the Investment Builder?

The Investment Builder is the defined contribution (DC) part of USS. If you’re a member of this part of the scheme, your contributions are invested to build a savings pot that you can access in a variety of ways, from age 55*.

What’s changing?

1. Target Retirement Age

The first change is around the Target Retirement Age:

• If you started saving in the Investment Builder on or after 1 October 2020, and you’ve not set your Target Retirement Age (TRA), it’s automatically set to our Normal Pension Age of 66.
• If you started saving in the Investment Builder before 1 October 2020, and you didn’t set a TRA, yours has automatically been set to age 65.
• If you’ve set your own TRA, it will stay as it is.
• Your TRA doesn’t need to be the same as the Normal Pension Age, and you can set or change it whenever you want to in My USS.

2. USS Bond Fund changes to increase diversification with a potential to boost returns

We regularly review our investment funds to ensure members get access to investments that will aim to manage risk, while aiming to provide good financial returns.

In line with this, we’ve made some changes to our USS Bond Fund, which invests in a mixture of government and corporate bonds. Our aim is to provide members with a more appropriate allocation to these bonds that is in line with their expectations. We are also increasing the fees to the USS Bond Fund with effect from 1 February 2021.

As of 1 October 2020, we changed from a passive to an active management approach. The previous approach primarily focused on passively investing in UK bonds, however the new disciplined and systematic active approach invests in bonds from all over the globe with a focus on sustainability. We think the combination of this active, global and sustainable approach is a more effective way to manage the fund to meet the objective of investing in a mix of different kinds of bonds.

As a result of this, the USS Bond Fund fees will change from 0.1% per year to 0.2% per year (before subsidy) with effect from 1 February 2021. Members who transfer other pension savings in to USS from other schemes do not benefit from the employer subsidy on that portion of their pension savings.

The benchmark against which performance is assessed has also changed with effect from 1 October 2020 to the Barclays Global Aggregate Bond Index (GBP Hedged). Members will have access to a broader range of investments with an active manager making decisions on what type of bonds to invest in, and which companies’ bonds to hold. This will potentially help to reduce risk and boost returns.

Do I have an Investment Builder pot?

If you earn above the salary threshold, have transferred funds from another scheme into USS since October 2016 (including switching any Money Purchase AVCs from Prudential), and/or make additional contributions, you’ll have an Investment Builder pot.

How do I make changes to my Investments?

If you’d like to review or make changes to your investments, please log on to My USS.

* The government has announced they will raise the minimum pension age to 57 in 2028. Depending on where you are in your retirement journey, this could impact how early you can access your USS benefits.

Important information

Please note that the fund manager(s), benchmark(s) and/or the fees may be changed by USS from time to time without prior notification to members - please check the Quarterly Investment Report for the Investment Builder available in My USS for the latest information.

Published: 3 December 2020